July’s brutal downpours prevented Asset Allocator from frequenting quite as many beer gardens as we would like, so we researched US equity funds instead.
Naturally you could have just bought an S&P 500 tracker and lit a cigar, but fund selectors often choose the road less travelled so we thought we’d have a scan of the best-performing US active funds in the first half of the year and see how they correspond to allocator holdings.
Here’s what we found.
2024 has seen the US market roar ahead of its peers, with sevensix five tech stocks dragging the rest of the index by the scruff of its neck.
While January to June is a somewhat arbitrary timeframe, it captured the period when the market truly believed six rate cuts were coming (remember that?), and includes all the time spent watching the S&P going from strength to strength.
During that period the benchmark returned 16 per cent, so we looked at only those funds which attained 20 per cent or more, in order to allow for remaining outperformance after fees and other deductions.
The best-performing fund this year so far is Alger Focus Equity, which has returned 29 per cent, although not a single allocator we cover is invested in it.
That trend continues throughout the shortlist – the DFMs we cover only own a handful of 2024’s top picks, so we’ll zoom in briefly on those for you now.
GQG Partners US Equity has managed 27 per cent since January - the third best performing fund in the IA North America sector - and is owned by three portfolio managers.
Not far behind, Artemis US Select has returned 20 per cent so far this year and is also owned by three, after one sold up at the start of 2024.
There are about 50 or so funds that are hovering above-benchmark this year, with a select few at all widely held by the allocators we cover. This could imply they’re not picking winners, or that the safer play across the pond is, in fact, to go passive.
Indeed the most popular active US equity growth fund (so excluding funds with an income mandate) is Dodge & Cox US Stock which returned just shy of 9 per cent in the first six months of 2024, underperforming the S&P 500.
We should also consider performance on a more long-term basis, which is why our recent 100 Club rankings gave us the chance to consider funds that have outperformed over both one and five years.
JPM American was our winner, returning 127 per cent over five years when compared to the index’s 80 per cent, and it even outperformed the S&P over 10 years too.
Quilter Cheviot owns the trust version and fund research analyst Carly Moorhouse was on hand to give us their rationale:
“Their sustained outperformance can be attributed to strong stock selection, strategic use of leverage, and a pragmatic approach to rotating portfolio holdings and allocating between the growth and value sleeves of the fund,” she said. “The team has demonstrated a remarkable ability to select the best ideas from both categories, merging them into a single portfolio that has outperformed expectations with its lower-risk and more balanced investment strategy.”
Another contender was Natixis Loomis Sayles US Equity Leaders, which returned 105 per cent over five years.
Both mandates have had strong starts to 2024, each outperforming the benchmark but neither quite challenging for the top spots in this year’s data thus far.
You can read more about whether allocators should stay passive or go active, here.
