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Multi-Asset Blog - America Last?

Thursday, May 11, 2017

Will Bartleet, CIO and Portfolio Manager of Pacific Multi-Asset
America Last?

US investors could be forgiven for putting America first in their asset allocation over the last seven years. US stocks gained over 130% from the end of 2009 to the end of 2016, whilst the rest of the developed world rose less than 30% and emerging markets only managed to return 6% in dollar terms.

American equities have had a lot going for them: a hugely supportive central bank, the strongest recovery of the large developed economies, high and growing margins and a vast buyer of equities – the companies themselves - issuing debt to buy back shares. These elements have all contributed to stronger earnings growth than was available elsewhere. In addition, global investors have been willing to attribute higher valuations to capture these earnings, further boosting share prices.

Despite the arrival of a heavily pro-business President, many of these benefits are starting to wane: The Federal Reserve is starting to raise rates, other economies are starting to grow faster, margins are coming off their peak and buybacks are slowing. We believe these trends are likely to continue, and with equities outside the US trading at more attractive valuations, we are increasingly shifting our equity allocations elsewhere.

IMPORTANT INFORMATION | Issued and approved by Pacific Capital Partners Limited, a limited company registered in England and Wales, authorised and regulated by the Financial Conduct Authority . The information contained herein is not approved for use by the public and is only intended for recipients who would be generally classified as investment professionals. Information or opinions contained in this article do not constitute an offer to sell or a solicitation, or offer to buy, any securities or financial instruments or investment advice or any advice or recommendation in respect of such securities or other financial instruments. Where past performance is shown it refers to the past and should not be seen as an indication of future performance.

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