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The US small cap stars to play the Trump bump

American smaller companies could expect to benefit if president Trump adopts protectionist policies and these are the managers that can make the most of it.

Vanguard

Vanguard’s offering outside of the US is built upon Gary Hatton of the Vanguard Discoveries fund, and it is easy to see why. Over the past seven years his riskadjusted ranking places him fourth out of 435 managers globally. The key characteristic of this portfolio is the huge 40% allocation to healthcare stocks, which is double its index weight in the micro cap sector and a large source of the portfolio’s outperformance.

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Vanguard

Vanguard’s offering outside of the US is built upon Gary Hatton of the Vanguard Discoveries fund, and it is easy to see why. Over the past seven years his riskadjusted ranking places him fourth out of 435 managers globally. The key characteristic of this portfolio is the huge 40% allocation to healthcare stocks, which is double its index weight in the micro cap sector and a large source of the portfolio’s outperformance.

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JP Morgan AM

While JP Morgan has many managers active in this sector, the real star of recent years has been Don San Jose, manager of the JPM US Smaller Companies fund. He is top quartile or better on a risk-adjusted basis over three, five and seven years. The fund is overweight both the consumer discretionary and staples sectors. The fund has little exposure to the sector most susceptible to protectionist strategies, technology, with just 6.7% invested, or less than half the market weight of 15%.

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Aberdeen AM

Manager Ralph Basset has been in something of a sweet spot over the past three years. He ranks fifth out of 711 managers globally, and top in the UK. He has bet big on industrials and financials, which are a key focus of the new administrations rhetoric. Further overweights in both consumer discretionaries and staples suggest he has faith in the US consumer, who should be net beneficiaries of domestic growth.

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Robeco

At the helm of Robeco’s UK offering in the sector is Steven Pollack. He manages the Robeco BP US Select Opportunities fund. Over the past five years to the end of December 2016, Pollack has performed well, returning 162%, well ahead of the average manager’s 128%. Despite the run-up at the end of the year, Pollack believes that there are still pockets of value to be found. December saw the fund add two new positions to its tech holdings. Financials remain around a quarter of the portfolio.

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