Which Active Managers Have Stormed Ahead Since Trump's Election?

Trump's victory over Democratic candidate Hillary Clinton sparked a rally for value stocks, after the President promised a major fiscal boost for the US economy.

However, with Trump failing to get his tax reforms through until only recently, Peter Sleep, senior investment manager at 7IM, said this had enabled growth managers to take advantage of the "inbuilt bias" in the US market.

"Growth managers are outperforming, blend managers are underperforming a bit and value managers are being killed," he said.

Growth managers have had a style tailwind during 2017, with technology stocks in particular performing strongly throughout the year.

Facebook and Amazon, both among the four biggest holdings of the top three performing IA North America sector funds since the election, have seen their share prices soar 56% and 49% respectively since the start of the year.

Top performers in the IA North America sector since Trump's election are led by Dennis Lynch's $1.8bn Morgan Stanley US Growth fund, which returned 29.4% in sterling terms to 6 November, according to FE.

This was closely followed by the $257m New Capital US Growth fund, the $1.4bn T. Rowe Price US Large Cap Growth Equity fund, and the £30m VT De Lisle America fund.

At the other end of the chart, the worst-performing fund in the sector, according to FE, was the $48m Eaton Vance International US Value fund, dipping 0.85% since Trump won the keys to the White House, while the $26m Janus Opportunistic Alpha fund only returned 0.37%.

Adrian Lowcock, investment director at Architas, commented: "In the US, there have been periods of rotation within markets particularly when Trump was elected.

"There was a rotation into value and to areas of the market which were expected to do well in a ‘Trump era', such as infrastructure.

"A lot of fund managers did not necessarily buy into that and therefore when it swung back they benefitted more in 2017."

Small caps on top

Meanwhile, small-cap managers on average outperformed their larger counterparts, with the IA North American Smaller Companies sector returning 19% compared to the IA North America sector gain of 16.7%.

The £95m JPM US Smaller Companies fund recorded the strongest performance across the two sectors, climbing 34% over the period, closely followed by the $1.1bn Legg Mason Royce US Small Cap Opportunity fund, which returned 29.5%.

Haig Bathgate, joint-CEO and CIO of TCAM, said domestic-facing small caps had benefitted from the US economy moving "substantially" ahead.

He added: "Also, there are more inefficiencies as you go down the market-cap spectrum, so there tend to be more opportunities as there are stock specific variables."

Meanwhile, analysts at AB Bernstein found stock correlations had reached their lowest point in a decade during 2017, which made it easier for active managers to discriminate between the winners and the losers.

However, Morningstar data found only 34% of UK-domiciled funds in its US Large-Cap Equity Category outperformed the S&P 500 from the beginning of November 2016 through to the end of October 2017.