Fund of the week: Biggest buys are now in the US
Aug 29, 2008
Investors have long steered well clear of North America, "and with good reason", says Fund Strategy. "But when they start buying US equities again, Martin Currie North American looks an excellent bet." Over the 12 months to July, it's returned 3.1% against a 12.1% drop for the average manager in the North American sector. Over three years, it's up 23.9%.
The fund has largely outperformed because manager Tom Walker avoided the country's worst-affected sectors – financials and the housing sector – in favour of areas such as technology and exporters. One of his favourite stocks now is Google, which currently trades on a forward p/e of 24, far off its stratospheric post-flotation valuation. As the advertising market cools, he tells The Guardian that direct marketing through the world's top search engine will become more popular.
Technology manufacturers such as IBM and Apple are among the fund's top holdings, and have done well on the back of the weak dollar as cheap US products are bought overseas. IBM sells two-thirds of its products abroad and is valued on less than 14 times earnings, Walker tells The Observer. Even with the dollar strengthening, the fund should still outperform. "If you're in the UK buying into the US with sterling you can get a double whammy," Alan Steel, director of Alan Steel Asset Management tells The Scotsman. He reckons that with many undervalued companies and an oversold currency, America is now "the biggest opportunity worldwide".
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Martin Currie North American fund top holdings
Name of holding - % of assets
International Bus Mach Corp - 4.2%
Wal-Mart Stores Inc - 4.0%
Potash Corp of Saskatchewan Inc - 3.4%
Google Inc - 3.3%
CVS Caremark Corp - 3.1%
Apple Inc - 3.0%
Cisco Systems Inc - 3.0%
Exelon Corp - 2.9%
State Street Corp - 2.8%
Nextel International Inc - 2.8%
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