กรุงเทพฯ--25 ก.ค.--Marketing Communications
While global financial markets are likely to remain nervous post-Brexit, there are positive trends in the US that will support US small caps, according to Aberdeen Asset Management Company Limited (AAMCL).
June payroll data suggest a US expansion that, while still lacking in conviction, is robust enough to handle global shocks. Job hiring is up, unemployment still below 5% and, most important, wages are firming.
This resilience is reflected in the relative strength of small cap fundamentals as well as increasingly attractive valuations. Almost 80% of their revenues are in domestic areas, according to Philadelphia-based fund manager Timothy Skiendzielewski, who runs US small caps for the Aberdeen Group.
Small caps relative insularity means that unlike their larger brethren they have less sensitivity to the dollar whose value first see-sawed in the wake of China's slowdown. (A strong dollar hurts US exports.)
They have also fallen to a discount as Wall Street tests new highs, for the first time since 2003. Traditionally the asset class attracts a premium for its faster growth prospects.
Large cap outperformance had rested in good part on cheap money helping to fund buy backs and M&A activity. Slower sales now threaten the sustainability of underlying earnings' growth and hence support for today's valuations. Small caps on the other hand continue to invest.
AAMCL launched a US small cap fund in October last year, the Aberdeen American Growth – Smaller Companies Fund (ABAGS). The fund has shown strong relative performance since inception and was up over 10% in the three months to end May (27/05/16).
ABAGS master fund, the Aberdeen Global – North American Smaller Companies Fund, has consistently ranked top quartile among its peer group in its five and a half year life*.
Timothy Skiendzielewski, Investment Manager, Aberdeen Asset Management, comments:
"We are keeping a close eye on the fundamentals of our holdings which up to this point have remained sound. Granted, there are numerous things to worry about.
'Brexit' has highlighted weaknesses at the heart of the European project. Some of the same geopolitical themes lie behind the upcoming US presidential election, which has already been one of the most divisive campaigns in memory.
"Our job as fund managers is to keep a cool head, and I believe with volatility climbing once again there will be opportunities to pick up mis-priced stocks. So often we find US small caps fly under the radar when mainstream markets become unsettled. Investors should stay similarly focused."
*source: Aberdeen Asset Management Company Limited