While experts have deemed the current climate as extremely dangerous given talks of trade wars and the tense geopolitical climate, North American equities still prove steadfast, data from FE Analytics shows.
North American equities have remained consistently in the top quartile over the long and short term, as compared to their other equity sector peers in the Australian Core Strategies Universe, producing average returns of 8.60 per cent across the first two quarters of 2018.
The chart below shows the performance of the equity sectors across the year to end of May.
Head of equity strategy at Saxo Bank, Peter Garnry, said the information technology sector was by far the most dominant sector in the US equity market, and had the highest return on invested capital.
“The technology sector has changed from being dominated by hardware to being dominated by software which has much more attractive features for shareholders,” he said. “We recommend investors stay overweight software.”
BlackRock’s iShares S&P Small Cap ETF was the top performing fund across the last six months to date, which suggests that investors could stand to benefit from simply investing in the market beta.
The top ten holdings of the fund lie in consumer staples and information technology, reflecting Garnry’s comments about the IT sector performing well.
Garnry did suggest, however, that disruption from an escalating trade war posed the biggest risk to the tech sector.
BlackRock’s iShares Russell 2000 ETF was also in the top quartile, as was Perpetual’s THB US Micro Cap and BetShares’ NASDAQ 100 ETF, further suggesting an index invested fund is worth its weight.
The chart below shows the performance of the top five funds in the North American equities sector across the year to May-end, according to FE Analytics.
