Shares in Apple were trading at a record high of $161.96 after Wednesday's close, breezing past previous records. Investors were heartened by positive third quarter earnings from the Nasdaq-listed tech giant and guidance that the new iPhone 8 will launch before the end of September.
Apple represents JAM's largest investment at 5.8%, so the fund has benefited from the strong performance of Apple's shares. Fish expects the shares have further to run, thanks to the appeal of the iPhone 8. This is due to be launched 10 years after the first iPhone and marks a remarkable journey for the tech company.
‘We believe the shares of Apple remain very attractive here even after a very strong start to the year,’ Fish said.
‘The shares of Apple performed well due to surprisingly positive results for its largest revenue generating product – the iPhone. Most investors expected a deceleration of orders due to the upcoming launch of the tenth anniversary iPhone in the second half of this year. This upgrade cycle is expected to be the largest yet.’
Over the six months to July, the trust's net asset value (NAV) grew by 5.8%, outpacing a 3.9% rise by the S&P 500 index in sterling terms.
Performance was buoyed by the underlying strength of the US equity market, with the S&P 500 reaching a 26th new all-time high on 19 June.
Fish said the performance of the trust's large cap allocation had been boosted by healthcare and technology, although he acknowledged that a lack of exposure to Facebook and Amazon had detracted.
Investments in fast food chain McDonalds (MCD.N) and health insurers Humana (HUM.N) and Aetna (AET.N) were highlighted as standout performers.
Meanwhile, the fund also benefited from a bounce in small caps, again thanks to the tech sector.
In contrast, oil and gas exploration company Apache (APA.N) and services firm TechnipFMC (FTI.N) dampened performance after their share prices were impacted by a fall in the oil price.
Return to fundamentals
Fish (pictured) believes there has been a return to fundamentals for US stock pickers. This is because investors have lost faith in president Donald Trump’s ability to deliver on his aggressive growth agenda.
He believes US economic expansion and earnings growth remain intact, but is cognisant of the potential risks associated with higher equity valuations - particularly for stocks that tend to be less volatile.
‘Rich valuations for low volatility and low beta equities have yet to be corrected,’ said Fish.
‘These high prices continue to pose risks for investors searching for yield in a still low interest rate environment.’
The fund manager also highlighted the potential impact that the Federal Reserve’s interest rate hikes could have on economic growth.
‘Although the US economy is entering late cycle, we see a low risk of a recession in the near term, expecting earnings growth to remain on an upward trajectory,’ he said.
JAM currently trades at a 4.8% discount to NAV. Over the five years to 9 August, shareholders have enjoyed a gain of 124%. This compares to 104.5% by the average fund in the Association of Investment Companies' North America sector.