As a novice investor in Peps and pensions in the Nineties most of my money went into UK and European funds with a little in emerging markets.
Financial advisers often argued there weren’t any decent American funds, so I didn’t buy any. That’s still the case for many investors. According to the Investment Association we have £251billion invested in UK shares via investment funds.
This compares with £65billion in specific American funds, though there is a further £162 billion in global funds.
Facebook has fallen 40 per cent from its peak while Apple shares are down roughly a quarter since the company’s value peaked at $1.1 trillion.
‘Some of the favoured technology companies — such as Facebook, Amazon, Apple, Netflix or Google’s parent company Alphabet (the FAANGs) — have fallen a lot further than the overall index,’ he says.
Despite this he argues that some parts of the market such as utility or financial companies —so-called value stocks — have done quite well and remain attractively valued.
‘It’s likely that outperformance will be driven by value stocks instead of growth stocks in my view. The FAANGs still look expensive to us so we don’t own them (except for a small position in Alphabet),’ he adds.
But he says the wider technology sector ‘remains a rich hunting ground’. Peter Hargreaves, the joint founder of Hargreaves Lansdown — and a major investor in Blue Whale, a fund with 61 per cent in the U.S. — took financial advisers to task in a recent interview.
‘For 40 years I have been surprised at UK wealth managers’ omission of exposure to this incredibly important country.
‘Most portfolios have less than 10 per cent in the U.S. — some have none. The excuses have been endless but most quoted has been ‘lack of decent U.S. invested funds’. A lame excuse — even a tracker would have been better than shunning the market.’
Intriguingly HL, of which Hargreaves is no longer a director, has just two North America funds in its Wealth 150 of favourite funds, one of which is a tracker.
I share Mr Hargreaves’s surprise. Excuses offered in the Nineties just don’t wash today with a wide selection of funds offering exposure to the U.S. by various routes.
Balance is key in these turbulent times but if your U.S. exposure is tiny then you might want to be asking yourself or your adviser why.