M&G's Aled Smith on Obama's first 100 days

As Barack Obama reaches his 100th day in office, M&G Investments takes a look at the impact the President has had on the US market and some of the investment opportunities in the world's biggest economy.

Smith, who runs the M&G American fund, points out that although the S&P 500 index dropped 22% in Obama's first 50 days in office, it has since regained that loss. He added that the dialogue between governments suggests that much has been learnt from the protectionist mistakes of the past.

'The current bear market is the second most savage in the history of US equities, with the peak-to-trough falls experienced exceeded only by those of the Great Depression,' Smith said. 

'But the continuing dialogue between national governments, a process Barack Obama has been pivotal in, suggests that lessons have been learnt from history and there is a desire to not make the same mistakes made in the 1930s.'  

Smith has urged investors not to overlook the unrivalled breadth of opportunity in the US equity market and the proven ability of US companies to maximise shareholder wealth.

He said: 'Although market noise is likely to remain high in the short term, presenting the potential for bouts of short term disappointment, for those able to see through it and take a long term view valuations are compelling. Moreover, these opportunities can be found right across the market.'

Two of Smith's favourite picks are search engine giant Google and Coca-Cola.

Smith said he has been impressed by Google's new chief financial officer who is placing a greater emphasis on the importance of reducing costs, fostering a cost conscious culture within the company which has been missing thus far as the company focused on aggressive growth.

He said this has not come at the expense of the company's growth prospects. 'The company has already invested a lot of capital in developing the next generation of web-based services and software platforms such as its Android mobile phone user interface. The company's current valuation gives no recognition to the potential monetisation of any of these products.'

Meanwhile, Smith sees Coca-Cola as a value opportunity after investors chose to focus on falling sales of carbonated soft drinks, particular in its home market.

'We believe the true value of the company lies in the unequalled reach of it's distribution business,' Smith said. 'This enables the company to maximise the opportunities presented by higher growth products, such as its vitamin water offerings. This should enable the company to sustain the high returns that it has generated for many years.'