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  • July 17, 2017
    Equities
    Mark Sherlock
    Amid fears of an overheated market and uncertainty around Trump’s presidency, Mark Sherlock, Lead Portfolio Manager of the Hermes US SMID Equity Fund, believes there are still great investment opportunities to be found in the US small and midcap space. A market driven by fundamentals Year-to-date the Russell 2500 has returned circa 5.0% (compared with c9% for the S&P 500 Index). At a sector level, there has been a rotation out of some of the beneficiaries of the so-called “Trump trade” (banks, industrials) into parts of the market (healthcare, technology) which relatively underperformed in the post-election euphoria of Trump’s pro-growth policies. This rotation reflected the weaker economic data coming through in February and March and acknowledged a realisation that many of Trump’s policies are controversial and will likely require compromise. At the same time an improving European economy and Macron’s victory in the French Presidential election have seen investor interest switching from the US. These factors make for a better set up for the asset class- a market driven by fundamentals rather than one based on the expectation of political stimulus.
  • June 14, 2017
    Equities
    Mark Sherlock
    By raising the benchmark US interest rate by 25bps to 1.25%, the Federal Reserve has shown its confidence in the domestic economy and financial conditions. The fourth hike since the financial crisis, and the third in seven months, follows the US unemployment rate hitting a 16-year low of 4.3% last month but also soft growth in the first quarter, from which the Fed believes the economy will rebound quickly. With rates edging closer to normalisation, the market is focused on whether the Fed will begin unwinding its balance sheet, which could begin as early as September.
  • April 28, 2017
    Equities
    Mark Sherlock
    As Donald Trump approaches 100 days in office, it appears that more time is required for his administration to implement the stimulative policies he has promised. Irrespective of any policy changes, Mark Sherlock, Lead Portfolio Manager, Hermes US SMID Equity Fund and Alex Knox, Senior Investment Analyst, believe the underlying strength of the US economy and its wealth of high-quality small- and mid-cap businesses will continue to provide attractive investment opportunities. Software developer Manhattan Associates is one of them. Baby or bathwater? Every January, despite efforts to stoke post-Christmas consumption with hefty discounts, many retailers experience cash flow problems and some go out of business. This year, the shift towards online from bricks-and-mortar stores accelerated faster than anticipated. Given that plenty of shops are struggling in an already tough competitive environment, media and stock research reports about the performance of retailers have been alarmist.
  • November 28, 2016
    Equities
    Mark Sherlock
    The dramatic shift in US leadership has fundamentally changed the outlook for domestic small- and mid-cap (SMID) stocks. The consensus view that the economy was locked in a low-growth, low-inflation mode should be revisited. Markets have responded positively to pro-growth policies put forward by Trump, such as spending $1tn on infrastructure and slashing the corporate tax rate from 35% to 15%.