US EQUITY
Three-year sector performance
SECTOR ANALYSIS
The North American equities sector return
was 29.1% in US dollar terms over the threeyear period, comparing favorably to the
North America small/mid-cap return of
25.68%. Both sectors are the top performers
among all regional equity sectors, with all
funds in this category delivering positive
returns over the period. Funds pursuing a
growth strategy did typically perform better
than those carrying a value style, regardless
of market cap. On the other hand, we did see
some exceptions, including the Aberdeen
Global North American Smaller Companies
and Fidelity America products, which follow
a value strategy. Strong performance placed
them near the top.
MARKET REVIEW
Source: FE Analytics (31 Mar ’13 to 31 Mar ’16)
Three-year annualised return/volatility
US equities had a strong run in 2013 and 2014,
thanks in part to the improving macroeconomic
backdrop and resilient corporate earnings and
balance sheets. Investors somewhat worried
about the US Fed tapering and subsequent
rate hike, but were reassured by the central
bank that the normalisation progress would
be gradual and dependent on macroeconomic
data. By mid- 2015, the market was hit by the
increasing concerns over the slowdown in
China and the Fed decided to delay its first
rate hike until December. Overall, US equities
remained the best performing market among
the major regions.
MARKET OUTLOOK
After strong performance in recent years,
valuations of US equities can no longer be
seen as cheap and currently trade slightly
above their long term average. With help in
cost reduction and deleveraging, corporate
earnings of US companies should remain
resilient despite some headwinds posed by a
strong US dollar and low commodity prices.
Despite the rising external uncertainties,
the US economy is expected to continue
expanding in 2016.
Provided by FE Advisory Asia as of 31 May ’16
Source: FE Analytics (31 Mar ’13 to 31 Mar ’16)
www.fundselectorasia.co