The top five asset classes to target in 2017
By Kristen McGachey, 22 Dec 16
As 2016 draws to a close, these are some of the key areas investors are pinning their hopes for the new year on.
Trump has promised “yuge” tax cuts for corporations and the American middle and working classes during his presidency, that, as he boasted earlier this month, would be “bigger than Reagan.”
While we must wait to see whether he delivers on these dramatic proposals, his words have already made a big impact in the investment industry. The Association of Investment Company’s annual fund manager survey found that the US is the country most widely expected to outperform in 2017 among 40% of managers. And a majority of respondents (37%) felt the US would also outperform its peers on a medium-term (5 year) view.
In particular, investors are favouring US domestic companies under President Trump since they have the most to gain from a reduction in corporate tax, which would fall from the current rate of 35% to as low as 15%. Within this bracket, cyclical companies like financials and industrials have already performed well in the immediate aftermath of the election and many expect that momentum to continue into the new year.
David Marchesin, manager in GAM’s non-directional equity team, makes a case for regional banks: “We are seeing a major inflection point in the growth outlook for US banks. They are set to benefit from milder regulation, a widening of net interest margins as the yield curve steepens, and low provisions as the economy reacts to fiscal stimulus. Consequently, going long the market, particularly select regional names looks like attractive positioning.”
Tags: Investment Management
