Although the markets have rallied somewhat on the news that US politicians have managed to cobble together a deal regarding raising the debt ceiling, there is still some uncertainly over how concrete this is.


The Association of Investment Companies asked some investment company managers with significant US holdings to give their take on the situation.

Overall the conclusion seemed to be that the US was ‘too big to fail’.

Jeremy Tigue of the Foreign & Colonial Investment Trust, which is a global growth fund with 27% in US interests, said that the political stalemate in the US was now resolved and that market attention would switch elsewhere and that any rating downgrade would have only been temporary due to the size and liquidity of the US.

Mr Tigue also said that the future for US companies looked good and that America had three things going for it, ‘ … a growing and relatively young population, abundant natural resources and world leadership in technology’.

David McCraw, manager of Edinburgh US Tracker Trust plc, said that an overly austere budget could halt the US economy but would be an unlikely scenario. He also said that US companies looked high quality and strong. Ha also said that ‘Because markets are still quite defensively positioned, the US equity market could rebound if global manufacturing recovers its poise. So it’s encouraging that the US seems to be on the cusp of a pickup in activity. With Japanese related supply constraints easing, we should see inventory re-stocking and decent capital expenditure – and idled factory workers should soon be boosting employment figures’.

The manager of the Edinburgh Worldwide Investment Trust, Mark Urquhart told the AIC that the US economy may have slowed but forecasts for US corporate profits looked better. With cost cutting and a weak dollar helping. Some of the fund’s holdings, such as Google, Amazon and Apple were doing very well he said.

Investment company holdings in US (over 20%)

Investment Company

Sector

% held in US

JPMorgan US Smaller Companies North American Smaller Companies

100

Edinburgh US Tracker North America

99

F&C US Smaller Companies North American Smaller Companies

96

JPMorgan American North America

95

Biotech Growth Sector Specialist: Biotechnology & Healthcare

92

RENN Universal Growth North American Smaller Companies

78

International Biotechnology Sector Specialist: Biotechnology & Healthcare

77

Private Equity Investor Private Equity

76

Worldwide Healthcare Sector Specialist: Biotechnology & Healthcare

69

RCM Technology Sector Specialist: Tech Media & Telecomm

68

Polar Capital Technology Sector Specialist: Tech Media & Telecomm

65

Polar Capital Global Healthcare Growth & Income Sector Specialist: Biotechnology & Healthcare

49

F&C Global Smaller Companies Global Growth

41

Martin Currie Portfolio Global Growth

41

Impax Environmental Markets Sector Specialist: Environmental

40

Edinburgh Worldwide Global Growth

38

BlackRock New Energy Sector Specialist: Environmental

35

Jupiter Green Sector Specialist: Environmental

35

Scottish Mortgage Global Growth

34

Personal Assets Global Growth

33

Henderson International Income Global Growth & Income

31

Ecofin Water & Power Opportunities Split Capital Trust

28

BlackRock Commodities Income Sector Specialist: Commodities and Natural Resources

27

Foreign & Colonial Global Growth

27

Blue Planet Worldwide Financials Sector Specialist: Financials

26

JPMorgan Overseas Global Growth

24

Gartmore Global Global Growth

23

JPMorgan Elect Managed Growth Global Growth

23

Scottish Investment Trust Global Growth

23

Alliance Trust Global Growth

22

Herald Sector Specialist: Small Media, Comms & IT Cos

22

Invesco Perpetual Select Global Equity Global Growth

21

Brunner Global Growth

20

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