He adds: “As long as realised volatility continues to be lower than that implied in options markets, and as long as the major central banks stand as the marginal buyer of financial assets, the market’s volatility structure can remain suppressed.”
THE PICKS, BY FE
Artemis US Select
Cormac Weldon adopts a flexible approach to investing in this £621m strategy, in which he adapts the portfolio according to where the best opportunities lie. Mr Weldon moved to Artemis with the majority of his US equity team from Threadneedle to replicate his previously successful investment process. Stockpicking has traditionally been the largest contributor to the fund’s outperformance over the S&P 500, returning 20 per cent in the past year versus a 15 per cent rise by the index.
Fidelity American Special Situations
Angel Agudo’s approach involves investing in stocks that have fallen out of favour with investors. Mr Agudo prefers companies with recovery potential and limited downside risk. The £1.3bn fund backs the IT and Financials sectors, with allocations of 25 and 21 per cent respectively. The portfolio has outperformed the S&P 500 index and IA North America peer group in every calendar year between 2013 and 2016, but has struggled year to date.
EDITOR’S PICK
Baillie Gifford American
Tom Slater, Gary Robinson and Helen Xiong run this concentrated portfolio focusing on exceptional businesses with growth potential, a good culture and an “edge”. The fund is biased to consumer discretionary and IT, particularly firms that utilise technology to transform conventional business models. Concentrated positions in such stocks have led to strong year-to-date outperformance relative to the S&P 500 index and the IA North America peer group. Over three years the vehicle has returned 84 per cent, against a sector average of 49 per cent and a 58 per cent gain by the index.
