Fund managers' top Trump reactions

By Sam Shaw

Added 9th November 2016

Active fund managers are largely sanguine but braced for volatility over the coming weeks.

Fund managers' top Trump reactions

OMGI

Richard Buxton, head of UK equities at Old Mutual Global Investors, said: “It’s official. Donald Trump becomes the 45th president of the United States. The result is a massive anti-establishment vote by the American people, and one from which, although the US media is still reeling, I felt was a distinct possibility given the rise of popular politics globally.”

Buxton, who called the Trump victory in Portfolio Adviser, said: “If the Brexit vote taught us anything, it is don’t trust the stock market’s initial knee-jerk reaction to shock news. As I write, share prices continue to experience weakness as investors digest the implications of a Trump victory.

“But let’s not forget a vote for Trump is a big reflation trade. Trump has openly stated he will employ extensive fiscal stimulus, resulting in the likes of renewed bridge, road and rail building. All of these measures are essentially ‘pro-growth’ policies. As for his trade-mark standing up to China, ‘fair trade’ not ‘free trade’ is no bad thing in my view.”

His colleague Ian Heslop, head of global equities and manager of the Old Mutual North American Equity fund, was expecting a short-term sell-off in his asset class.

“We shall be monitoring markets closely, but it would be reasonable to expect, in the short term at least, a sell-off in equities, not only in the US but also internationally. The immediate reaction of equity markets was negative, with Asian indices falling.”

Invesco Perpetual

Invesco Perpetual’s senior managing director of investments, Karen Dunn Kelley said opportunities existed to seek consensus in some areas. 

She said: “Members of both parties have recognised the need to rebuild and upgrade America’s infrastructure, such as aging roads, bridges and power grids.  Likewise, there appears to be broad support for some measure of corporate tax reform to lower rates and reduce the number of loopholes. 

“While the gridlock that has marked recent years has been a cause for frustration with the US voting public, the relative predictability that it produced may have been a source of comfort for the markets.  Given the political uncertainty introduced by the election results, we expect to see continued market volatility during the coming weeks.”

Fidelity

Fidelity American Special Situations fund manager Angel Agudo said a reduction in corporation tax would support US equities in the short term.

“Sector-wise, the healthcare sector should witness an initial uplift following Clinton’s loss in the election and its future path will be decided once Trump come out clearer with his plans on the [Obamcare] and drug pricing. The financial sector could also benefit if Mr. Trump’s lives on his campaign promise of reducing regulations.”

Agudo added: “After decades of subpar investment in infrastructure, the US’s out of date infrastructure is clearly acting as friction for GDP growth. In addition, the defence budget has also witnessed cuts in recent years and further meaningful cuts are perhaps unlikely in the context of ongoing global security concerns.

“In general Republicans are considered to be pro-defence and hence it is no surprise that Donald Trump has voiced his opinion for an increased defence budget. Given both Trump and Clinton had agreed on these areas, some of this has already been discounted in the market but there are prominent investment opportunities in both areas.

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