US tops league for unit trusts
UNIT trusts investing in the United States are leading the performance tables for the first time in three years.
These funds have increased in value by just over 20 per cent on average over the past six months, according to statistics firm Micropal.
Fund managers believe this high rate of growth may be unrepeatable over the next six months, although they say prospects still look good for the US market over the longer term.
Michael Yuen, director of funds marketing at GT, which has three US funds with a top 10 performance over the past six months, was optimistic about the sector's long-term future.
He said the US market performance had been driven by stocks in the technology and health care sectors.
According to GT's research, technology high-fliers Intel and Microsoft are highly profitable and capable of sustainable growth of between 20 and 30 per cent per year.
Intel stock is trading on 16 times 1995 earnings, in line with the US stockmarket as a whole, while Microsoft shares are trading at 40 times earnings.
Mr Yuen said that the ageing population in the US meant more was being spent on health care.
This accounted for the performance of the Biotechnology and Applied Science fund, which has increased in value by more than 30 per cent over the past six months.
Guiness Flight's American Smaller Companies fund has achieved growth of more than 36 per cent growth during the past six months.
Nick Crosby, who manages the fund in London, said: 'Over the next six months there is lots of scope for continued improvement.' He added: 'Whether there will be such a strong performance in the second half of the year as in the first half is another matter. It could be difficult to achieve over 50 per cent growth in a year, but that does not mean it will not continue.' He has also been concentrating on technology and health care stocks.
'The technology boom shows no sign of abating. Big pharmaceutical companies need new ideas and the new ideas are in the smaller biotechnology companies.' Ann Hall, London-based adviser to Sun Life's Global Portfolio American Growth fund, which is up by almost 35 per cent over the past six months, has also been concentrating on technology stocks and producers of drugs.
Ms Hall was cautious about the short-term prospects but said the longer-term outlook for the US market was 'reasonably robust'.