New Model Adviser - For Professional Investors

Register free for our breaking news email alerts with analysis and cutting edge commentary from our award winning team. Registration only takes a minute.

Investors pile into US funds after Trump victory

Investors pile into US funds after Trump victory

Investors have piled into US funds after Donald Trump's shock victory in the presidential election, as stock markets rally across the pond in anticipation of his tax-cutting, heavy-spending agenda.

US funds enjoyed net inflows from retail investors of £245 million in November, the highest amount since March 2015's £349 million all-time high, according to figures from the Investment Association, with £168 million invested in the North America sector and a record £77 million invested in rallying North American Smaller Companies funds.

The heavy backing of US funds comes as investors have responded bullishly to the prospect of a Trump presidency. Since the vote, the S&P 500 has risen 6% to all-time highs, while an even stronger rally has taken hold on the Russell 2000 index of smaller companies, up 14.7%. With the pound having fallen against the dollar over that period, UK investors have enjoyed even stronger returns.

November also saw investors finally embracing UK funds, which saw their first net inflows for 2016. After a turbulent start to 2016 that saw the FTSE 100 drop as markets were gripped first by fears over China's slowing growth then broader worries over the global economy reflected in a banking sell-off, the stock market's initial plunge following the Brexit vote added to investors' worries.

But since then the index has rallied, propelled in part by the fall in the pound following the European Union referendum that has boosted the value of international earnings.

Investors put aside their worries and invested a net £114 million in UK funds in November, versus a monthly average of £326 million withdrawn over the previous 12 months.

But 'absolute return' funds continued to top the sales charts in November, attracting £366 million of net inflows, having topped the sales charts for nine of the last 12 months.

That's despite a muted performance from the sector, which features funds aiming to deliver a positive return in all market conditions.

Leave a comment!

Please sign in or register to comment. It is free to register and only takes a minute or two.
Comment & analysis