This week has been a rather turbulent one for the Reeves’ Portfolio’s.
This has come off the back of negative market news at the beginning of the week, particularly over concerns that UK banks could be overexposed to Dubai debt and the news that bankers would be subject to a one off bonus as part of the Chancellors pre-budget report.
However, it has not been all doom and gloom with Reuters reporting that the FTSE has gained 51% from its six year low in March 2009. Similarly global markets have shown an upwards trend at the time of writing.
Opportunities in America?
The pick of the funds this week is the Schroder US Mid-Cap Fund which has provided a 1.96%* return for the week. So far this year, the fund has achieved a 23.65%* return.
This is a relatively new fund, launched in 2005, however it has already achieved a AAA rating from Old Broad Street Research. It has also achieved top quartile ratings on a 1 and 3 year basis**. The funds investment objective is to provide capital growth and income through investment in equity securities of smaller and medium-sized US companies. As investments in smaller companies can be less liquid than investments in larger companies price swings may therefore be greater than in larger company funds. Similarly funds that invest solely in companies of one country or region can carry more risk than funds spread over a number of countries or regions.
Although investors should remain cautious there are some good opportunities in the North American market. Here are some updated comments on the market:
- “The outside view is 7% to 8% GDP growth for 2010 (in North America), which is miles outside the consensus. The consensus forecast is inconsistent with the data flows we’re getting, and with history. The probability of growth being higher than 2.6% is much higher than the market believes, and the probability of it being lower than what the market believes is much lower.” (Bill Miller, Legg-Mason, Fund Strategy 9.12.09)***
- Equities in general are set to outperform, with valuations at attractive levels, the manager says. “Money is pouring out of equities and into bonds in the US—we are seeing the highest inflows ever. People tend to follow trend and outlook not valuation, but valuation right now is all in favour of equities rather than fixed income. (Bill Miller, Legg-Mason, Fund Strategy 9.12.09)***
- Ultimately a period of stable conditions, excluding the decline in the property market, could lie ahead, and it is inconceivable that the US will not be a key participant in the beneficial effects of ongoing globalisation with growing rates of Foreign Direct Investment coming from this sector into emerging economies. ****
The Schroder US Mid-Cap fund is currently one of 9 funds within The Reeves Independent Aggressive Portfolio which is available to our clients through our WRAP management system. Clients are able to manage their ISA’s, Pensions, Unit Trusts and Bonds through the WRAP system.
Sources of date:
*Morningstar 11.12.2009
**Trustnet Analytics 11.12.2009
***Fund Strategy 9.12.2009
****Financial Express Analytics
Other sources of data:
Schroder US Mid-Cap Fund Fact Sheet
Reuters News Agency
BBC News Market Data
This fact sheet is intended to provide general information and does not represent a personal recommendation of the product. The value of investments can fall as well as rise and you may not get back the full amount invested. Past performance is not a guide to future returns. The sections within this fact sheet are opinion only and do not constitute advice. Other charges may be applicable and are subject to change without prior notice. Please refer to our brochure for information on our other products and services.
