The MyFolio offering was launched in 2010 and the funds have consistently held overweights in US stocks since, before whittling it down to neutral in February and going to a moderate underweight in mid May.
The main reasons behind the move are high valuations relative to other regions, a belief that the US will raise interest rates this year and the impact the strong dollar is having on US companies’ earnings.
“We have been overweight US equities for the past few years and it has been great for us, adding a lot of value,” Hambi said. “It is more the relative attractiveness of Europe and Japan than negative views on the US that is behind the decision.”
“Much like a possum, the US expansion this spring is playing dead in a variety of ways,” said David Kelly, global chief market strategist at JP Morgan Asset Management.
“Real GDP growth was barely positive in the first quarter, and this number is likely to be revised into negative territory next week. Retail sales have fallen in four of the past five months and were lower in April than they were last August.
“Industrial production has also been sagging, with output declining for five consecutive months for the first time since 2009,” he added.
“The weakness in real GDP was exacerbated by bad weather in the east, a dockworkers’ strike in the west and some suspicious seasonal adjustment of government spending numbers,” Kelly continued.
“Retail sales have been disappointing. The decline in manufacturing production, while clearly disappointing, has only been half as severe as the fall in overall industrial production so far this year.
“While the economy is not dead, it isn’t particularly lively. However, for investors, it is important to look forward,” Kelly noted. “While growth in the first quarter will likely be revised negative, GDP growth in the second quarter still looks likely to be roughly 2-3% annualised.”
