Trustnet Magazine 61 April 2020 | Page 42

In focus [ SECTOR PROFILE ] 42 / 43 Trust pick The US At the end of February, Mid Wynd International had 56 per cent of its portfolio invested in the US. However manager Simon Edelsten says this has now been cut to below 50 per cent as he fears the US was not prepared for the crisis. “Our view on the US is the one that has changed the most,” he says. “President Trump has stated the US is not equipped for a shutdown, so we have gone from hoping for a good year to fearing the worst. “Closing roads and rail is not the US way, while its healthcare system is highly fragmented, especially its hospitals, with things controlled very much on a state-by-state basis.” Mid Wynd has a third of its assets in tech, dominated by US companies. “Many of these, such as Amazon, have shown their importance to us in new working conditions while others, such as enterprise software companies, are seeing little change to their growth levels,” adds Edelsten. CURRENT VALUATIONS VERSUS 15YR AVERAGES CAPE Forward P/E Trailing P/E P/B Yield (%) UK 12 (13) 10 (12) 11 (14) 1.4 (1.8) 6.2 (3.8) US 24 (25) 15 (15) 18 (18) 2.9 (2.8) 2.3 (2.0) Europe ex UK 16 (16) 12 (13) 14 (16) 1.5 (1.8) 4.0 (3.2) Japan 17 (24) 11 (14) 13 (16) 1.1 (1.3) 2.8 (1.9) EM 10 (15) 10 (11) 13 (14) 1.4 (1.7) 3.2 (2.6) Scottish Mortgage Adrian Lowcock, head of personal investing at Willis Owen, picks Scottish Mortgage as his trust of choice for access to the US, even though it sits in the IT Global sector. “While some stocks in every portfolio will suffer, the disruptive technology focus of this fund is likely to have some big winners such as Amazon and Netflix,” he explains. “The crisis is likely to accelerate the transition to technology and introduce new audiences to it as well.” Scottish Mortgage is up 123.51 per cent over the past five years compared with gains of 42.61 per cent from its sector. It is on a discount of 1.09 per cent. Source: Schroders. As at 31/03/2020. 15-year average (median) in brackets. TRUSTNET trustnet.com