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32
PORTFOLIO ADVISER
[www.portfolio-adviser.com]
DECEMBER 2011
FUND SELECTOR
US EQUITY FUNDS
FUND PICKER’S
COMMENT
PAUL STEVENS,
INVESTMENT MANAGER,
1ST PORT ASSET
MANAGEMENT
It is no surprise that by far
the largest fund is an ETF
that trades on the London
Stock Exchange and seeks
to replicate the S&P 500
index – the best known of
the broad US market indi-
ces. Launched in 2002, the
iShares S&P 500 $ (IE) is
more than double the
respective sizes of the
other featured ETFs.
The Vanguard US 500
Stock Index Fund also
tracks the S&P 500 and has
been in existence since
1998. The newer db
x-trackers MSCI USA TRN
seeks to replicate the MSCI
Total Return Index.
These funds with very
modest total expense ratios
Top ranked funds
Assets under management
are a useful way to invest
quickly for a broad brush
approach, while seeking
an active fund.
The
Robeco
US
Premium Equities D $ is
value oriented to an area
of the market that has not
been in favour in the past
three years. The manager
Duilio Ramallo has proven
adroit in his stock selection
and has done relatively
well in a difficult market
for his style.
By far the best
performing fund
in this table is
the Franklin US
Opportunities, a
fund with a growth
orientation that is
reasonably well
diversified and that
has a considerable
overweight to IT
”
“
The three funds within
this category that stand out
in terms of performance
are unsurprisingly growth
biased. We have been allo-
cating to both the UBS USA
Growth Fund and the
Threadneedle American
Select Fund for our clients
for the past several years.
Our decision to buy
these funds has been based
on their consistent per-
formance over a number of
years, as well as other
FUND ANALYSIS
Q
Managed by Aled Smith since December 2004, M&G American
Fund is one of the oldest US equity funds having been launched in
December 1972.
Q
The fund usually holds between 65 and 85 stocks (77 as at 30
Sept) with a typical holding period of three years. The aim is
to outperform the S&P 500, though there is no reference to a
benchmark in the stock selection process.
Q
As at 30 Sept, Smith’s top sector allocations were IT (16.9%),
consumer discretionary (14.8%) and healthcare (14.2%). Among
the top holdings were giants Chevron, Pfizer and Coca-Cola.
qualitative analysis.
The
Threadneedle
American Select Fund has
been managed by Cormac
Weldon since late 2001.
Weldon’s ability to invest in
smaller and emerging com-
panies, as well as manage-
ment turnaround situations,
has led to good alpha.
Threadneedle is UK
based, and therefore one of
few managers outside the
US to have consistent good
performance.
The team considers its
London location as an
advantage in terms of prep-
aration before the US
market opens, and for visits
from
leading
US
executives.
By far the best perform-
ing fund in this table (but
with the least assets in this
section) is the Franklin US
Opportunities, a fund with
a growth orientation that is
reasonably well diversified
and that has a considerable
overweight to IT.
One of the weakest
funds in this category has
been the Allianz RCM US
Equity Fund, which has a
pragmatic approach. The
fund aims to provide capi-
tal growth via exposure to
large US companies that
trade on attractive price
earnings valuations.
The fund is bench-
marked to the S&P 500 and
the manager, Seung Minn,
currently has sector weights
closer to the benchmark
than the other actively man-
aged funds in this category.
While the performance has
been a little lacklustre, it is
slightly less volatile.
Melissa Longley, investment
manager, and Nick Palmer,
investment adviser, at
1st Port Asset Management
also contributed to this
article.
Top 3 performing funds vs indices
-20
0
20
40
%
60
80
Oct
Apr ’11
Oct
Apr ’10
Oct
Apr ’09
Oct ’08
Source: Morningstar
S&P 500
UBS (Lux) ES USA Growth
Robeco US
Premium
Equities D $
iShares S&P 500 $
Top funds by AUM – 3-year risk/return
Standard deviation (%)
Return (%)
4
To 24 Oct ’11. Source: Morningstar
4.5
5
5.5
6
40
50
60
70
80
Sector average
Franklin US
Opportunities
A Acc $
Threadneedle Amer
Ret Net £ Acc
Allianz RCM
US Equity C2 $
UBS (Lux) ES USA
Growth ($) P Acc
L&G US Index R Inc
db x-trackers
MSCI USA
TRN Index T
Vanguard US 500 Stock Index Inv $
iShares S&P 500 $ (IE)
Robeco US
Premium
Equities D $
M&G American A Inc
To 24 Oct ’11. Bid to bid, £, gross income, no cap. Source: Morningstar
Top 10 US equity funds by assets under management
3-year
3-year
3-year
3-year 3-year
Morningstar Fund
Domicile
% chg Alpha Beta
R²
volatility Rating
size (£m)
iShares S&P 500 $ (IE)
45.03 -0.06 1
1
5.03
++++
5,421.56
Ireland
Robeco US Premium Equities D $
47.45 0.12
0.91
0.82 5.07
+++++
2,850.03
Luxembourg
UBS (Lux) ES USA Growth ($) P Acc
68.56 0.39
0.86
0.85 4.72
++++
1,828.33
Luxembourg
Allianz RCM US Equity C2 $
42.54 0.17
0.85
0.83 4.7
+++++
1,783.89
Ireland
Vanguard US 500 Stock Index Inv $
45.45 -0.08 1
1
5.02
++++
1,618.58
Ireland
db x-trackers MSCI USA TRN Index T
48.26 -0.03 1
1
5.01
++++
1,470.86
Luxembourg
Threadneedle Amer Ret Net £ Acc
62.54 0.5
0.83
0.83 4.56
++++
1,447.96
UK
M&G American A Inc
47.67 0.1
0.93
0.84 5.09
++++
1,423.41
UK
L&G US Index R Inc
47.45 0.07
0.9
0.9
4.76
++++
1,354.17
UK
Franklin US Opportunities A Acc $
79.34 0.32
0.98
0.86 5.34
++++
1,341.58
Luxembourg