After an unexpectedly optimistic start to the year for US equity funds, as sales topped the Investment Association (IA) retail charts in January and February, sentiment on the world’s largest economy has declined steadily throughout the rest of 2023.
According to the IA, there were net retail sales of £578m of North America funds during the year to August. The peak of these redemptions occurred in June when it was the worst-selling sector with outflows totalling close to £618m.
See also: Columbia Threadneedle: Volatility ahead as consumer resilience finally runs out
Given the S&P 500 fell close to 10% in 2022, after years of being the darling of investors and asset allocators alike, such outflows are no surprise. However, the S&P is up 12.5% year to date in sterling terms, with IA North America investors rewarded with an average fund return of 10.7%.
So is it time to show US equities some love again, or is the region’s high-tech and subsequently high-growth weighting simply too risky in today’s volatile markets?
See also: Tyndall’s Wintle reinvests in tech mega-caps
In this month’s head to head, Anthony Willis, investment manager in the Columbia Threadneedle Investments multi-manager team, explains its rationale for remaining underweight in the short term. Meanwhile, Felix Wintle, VT Tyndall North American manager, makes the case as to why the US should remain a key component in investors’ portfolios.
To read the rest of this article visit the November edition of Portfolio Adviser Magazine
