Fund Insights Directory 2016 | Page 64

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