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  • July 17, 2017
    Equities
    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.
  • April 21, 2017
    Equities
    Improved working conditions and energy efficiency have helped create a virtuous circle for the Canadian manufacturer of active wear. Our concern Textile and clothing manufacturers need to be conscious of working conditions including the physical state of factories and their treatment of employees – particularly in emerging markets – to maintain the integrity of their reputations in the industry that originated the ‘sweatshop’ tag. Between 2002 and 2004, serious allegations about exploitative labour practices were levelled at Montreal-based apparel maker Gildan. Following these claims, the company underwent an externally verified remediation process to improve practices at its production sites in Honduras, Nicaragua and Haiti. The result was the Gildan Code of Conduct, and this marked the start of the company’s development of best-in-class environmental, social and governance (ESG) practices within its industry. This discipline has helped the company improve productivity, lower costs and generate stronger returns for shareholders.
  • March 20, 2017
    Equities
    In the rapidly evolving US economy, businesses with strong fundamentals will survive and prosper. At Hermes, we look for companies that have enduring competitive advantages. Here, we highlight a financial opportunity that we believe will thrive in the coming months and years. Many market observers are anticipating a prosperous year for the US economy. Falling unemployment, rising wages and gradual growth have all laid the foundation for companies to outperform their developed market peers. Meanwhile, the new political government, under President Trump, is expected to introduce several favourable policies, including tax cuts, regulatory changes and repatriation of overseas profits.
  • March 10, 2017
    Equities
    President Trump’s pro-growth agenda, centred on fiscal stimulus, repatriation and de-regulation, should accelerate the US economy in the coming years. Nevertheless, his more measured recent speech to Congress was perhaps the first acknowledgement that the implementation of these policies will likely take time and require Republican endorsement. Mindful of this, it’s important to focus on pre-existing economic fundamentals as much as fiscal promises when looking to invest in the US. Domestically-focussed small and mid-cap companies are well positioned to continue to benefit from a healthy and improving US economy alongside any fiscal policies that may take time to come through.