Rated Funds review: US equities

Artemis US Smaller Companies is the best-performing Money Observer Rated Fund in the US equity sector over one year to 17 December, returning nearly 14 per cent as the wider US market - as measured by the S&P 500 index - returned just 5.1 per cent.

Money Observer's Rated Funds are a collection of funds and trusts compiled from a potential universe of around 3,500 open ended funds and 400 investment trusts.

Independently selected and reviewed by the Money Observer team in conjunction with Financial Express, our Rated Funds showcase some of the best performing investment vehicles across a broad range of regions, sectors and asset classes.

Managed by Cormac Weldon since its launch in 2014, Artemis US Smaller Companies is also the best performing fund in the Investment Association's US smaller companies sector over six months (-1.46 per cent) and one year.


Fidelity American Special Situations was the second best-performing Rated Fund over the period, with highly rated manager Angel Agudo returning nearly 12 per cent over one year to 17 December.

Agudo looks to invest in US companies that are undervalued, or cheap, either because they are out of favour or the market does not believe they have recovery potential. His largest holdings include computer hardware manufacturer Oracle Corporation and pharmaceutical giant Pfizer.

The JPMorgan US Smaller Companies Investment Trust was the third best performer over one year, with a share price return of 11.7 per cent. This has helped to narrow the trust's share price to net asset value discount to 2.5 per cent, compared to an average of 3.6 per cent over the past 12 months.

Managed by Don San Jose since 2009, the trust is also the best performer of our Rated Fund selection over three years and five years, with share price returns of 76.9 per cent and 107.7 per cent respectively.

The two other JPMorgan trusts in our selection fared less well, with JPMorgan US Equity Income and JPMorgan American among the bottom three performing US equity Rated Funds over one year with returns of 4.9 per cent and 0.3 per cent respectively.

However the worst performer was Aberdeen's North American Income Trust, which shed 1.3 per cent in share price terms in the year to 17 December and gained just 28.8 per cent over three years - making it the worst performer over both time periods.


On the US companies that have the best chance in 2016, Kully Samra, UK managing director of US asset manager Charles Schwab, says that those focused on the domestic economy and the US consumer are likely to do well.

'As evidenced by the Federal Reserve's decision to raise interest rates for the first time since 2006 on Wednesday (16 December), the US economy continues to be the strongest in the developed world with GDP growth of nearly 2.5 per cent predicted next year compared to just 1.4 per cent in Europe.

'In the US the consumer makes up over 68 per cent of the US economy, with the services sector accounting for 88 per cent of GDP. This makes consumer [focused sectors] one of the most important areas to watch next year and a good source of growth,' he says.

This means that US smaller company funds such as those of Artemis and JPMorgan - which typically have a greater domestic focus - could continue to do well next year.

Moreover, Samra adds, statistically the US market performs well in the fourth year of an election cycle and so the entire US equity market should deliver strong returns next year.

However, he voices concern over the popularity of far-right, anti-immigration Republican candidate Donald Trump, adding that a Trump victory could potentially discourage foreign investors and de-rail economic progress in the US.

Money Observer Rated Funds: US Equities
Rated FundTotal return to 17 December (%)
Artemis US Smaller Companies2.46-0.51-1.4613.87n/an/an/a
Fidelity American Special Situations2.925.632.2911.8374.4296.39115.81
JPMorgan US Smaller Companies0.633.372.711.6976.89107.69118.58
Old Mutual North American Equity2.45.771.4210.1575.84103.73120.99
VT De Lisle America-0.125.07-0.356.6454.2287.11n/a
JPM US Equity Income1.766.231.254.8551.2277.75n/a
JPMorgan American1.714.940.20.2554.4876.76148.85
The North American Income Trust-0.555.74-1.2-1.3328.8445.1876.37
Index: S&P 500 TR in US-0.352.79-1.795.1151.0477.0887.02
Index: MSCI World TR-1.420.99-4.545.0844.5156.9460.51

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