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US tailwinds
Perhaps the most eye-catching event
for global investors was the approval
of President Donald Trump’s tax
reforms towards the end of 2017,
which was the first major legislative
triumph for the outspoken president.
It was also the country’s biggest tax
system overhaul in 30 years. We
expect his corporate tax reductions to
spur on wage growth and fuel a pick-
up in consumer spending during the
next 12 months.
Talk of a trade war with China
might spook some investors, but I’m
on the fence. I don’t think a trade
war between the world’s two largest
economies benefits either country
and looks more like a push to force
the Chinese to open their economy.
Whether or not a ‘trade war’ does
develop, there are some things that
we are confident will keep the US on
track, such as the strong domestic
There are some things that
we are confident will keep
the US on track, such as the
strong domestic economy
and a clear pickup in capital
expenditure
FE TRUSTNET
[ JANUS HENDERSON ]
12 / 13
THE BANKERS
INVESTMENT TRUST PLC
Positioning as at 31 October 2017
By revenue generated
Asia Pacific ex Japan 3.5%
Japan 8.7%
North America 28.1%
Emerging Markets 30.9%
United Kingdom 13.9%
Europe 14.9%
By listing location
Asia Pacific ex Japan 16.9%
Japan 11.6%
North America 27.7%
Emerging Markets 2.4%
United Kingdom 26.6%
Europe 14.8%
Reweighted to exclude cash. Totals may not equal 100 due to rounding
economy and a clear pickup in capital
expenditure. This growth may be
dampened by further US interest
rate rises but I expect the Fed to stay
behind the curve by limiting the
number of interest rate rises this year.
Another positive for the US is the
recent revival of the dollar. Since
the lows of 2012, the trade-weighted
dollar (against a basket of currencies)
has appreciated by almost 40%, albeit
in 2017 it weakened against most
currencies. There are longer-term
concerns about the country’s national
deficit rising, but it’s not something
to worry too much about now and as
growth picks up around the world the
deficit could naturally decline.
and operate in structurally growing
end markets.
The majority of the portfolio is
tied to the following five long-term
secular trends, which the team
believe to be underappreciated by the
wider market; the transformational
effect of the internet, healthcare
innovation, paperless payments,
energy efficiency and emerging
market growth.
Take healthcare innovation,
which is important given America’s
ageing demographic – the country’s
population aged 65-and-over
reached 50 million for the first time
in 2016 and is expected to continue
growing as the ‘baby boomers’ reach
retirement. Considering this, we look
A hold forever approach
for companies that aim to provide
Broadly speaking, the valuation of the solutions to the challenges brought
US stock market appears elevated on on by an ageing population. For
most measures relative to its history. example, California-based contact
Our North American team remain
lens manufacturer The Cooper
very conscious of this and continue to Companies is a stock we like because
abide by a strict valuation discipline. one of its revenue drivers stems from
Although they operate with a “hold
the growth in multifocal lenses,
forever” mind-set, meaning each
which are widely amenable to an
company is bought with a view to
ageing population.
owning into perpetuity, each holding
Given the relative expensiveness of
must demonstrate sufficient upside
US equities, we have sold more than
over the next five years to earn a place we have bought in recent months.
in the North American portfolio.
The additions we have made to
The aim is to create a portfolio of
the portfolio come from a diverse
undervalued companies which enjoy
a sustainable competitive advantage
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