Performance fuelled by experience
Putnam Investments joined our line-up of investment managers in 2024. The Putnam US Large Cap Value strategy and the Putnam US Research Equity strategy have attracted significant inflows and built a reputation for delivering consistent alpha driven by stock selection.
US small caps have struggled in recent years. However, they have a well-established habit of emerging with higher-than-average long-term returns from long-term periods with low or negative performance.
99% of the Time, Positive 3-Year Returns Have Followed Low Return Markets
Subsequent Average Annualized 3-Year Performance for the Russell 2000 following 3-Year Annualized Return Ranges of Less than 3% from 31/12/1981 through 31/12/2024.
Source: Royce Investment Partners, as of 31/12/2024, the average of subsequent 3-year return ranges < 3% has 481 periods, the average 3-year return since inception has 517 periods. Past performance is not an indicator or a guarantee of future performance.
Recent years' underperformance has left U.S. small caps trading on low valuations relative to their own long-term average.
Read the latest insights and research from Franklin Templeton’s fund managers and strategists on the dynamic world of US equities. Value, growth, income, sustainable or small cap investing – US equities, it’s in our DNA.
US equity income can be an attractive approach for investors for several reasons, including:
US equity income funds typically invest in a broad range of companies across various sectors. This diversification can help mitigate risk and potentially provide a more stable return.
These funds primarily invest in companies that pay regular dividends, which can be particularly appealing to income-focused investors.
These funds has the potential for capital appreciation.
And why now?
Recent high inflation has served as a stark reminder of how important income growth is in protecting purchasing power in an inflationary environment.
The dividend payout ratio (what percentage of profits companies pay to shareholders as dividends) in the S&P 500 index is at historically low levels. We believe this means, even if a recession happens in the US, dividends won’t be severely impacted and could still grow.
As of 31 December 2023, latest available as of 30 September 2023. Source: Robert J. Shiller (Yale School of Management). Past performance is not a guarantee of future results. Investors cannot invest directly in an index, and unmanaged index returns do not reflect any fees, expenses or sales charges.
US value stocks have a track record of delivering solid returns, particularly during periods of economic recovery.
US value equity funds often include companies with stable earnings, strong balance sheets, and a history of weathering economic downturns. Investing in a US value equity fund allows you to benefit from the growth potential of established companies with strong fundamentals.
In periods of market volatility, value stocks often trade at discounts to their intrinsic values. This means investors can acquire shares of high-quality companies at a discount, providing an opportunity for significant upside as these companies realize their intrinsic value.
The US equity market is the largest and most sectorally diverse in the world. By targeting US equities, investors can access a vast pool of companies that are actively embracing sustainable practices and integrating environmental, social, and governance (ESG) factors into their business strategies.
The US is known for its innovation and leadership in many industries, including technology, healthcare, renewable energy, and clean technologies. Sustainable equity strategies that focus on US equities can tap into the potential of companies at the forefront of ESG innovation.
The US regulatory landscape is evolving to support and encourage sustainable investing, as evidenced through the Inflation Reduction Act. By targeting US equities, sustainable strategies can align with regulatory developments and cater to the growing investor demand for ESG integration.
Introducing three of our specialist investment managers that focus on US equities:
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Bottom-up analysis focuses on individual stocks as opposed to the impact of macroeconomic and market cycles.
Investments entail risks, the value of investments can go down as well as up and investors should be aware they might not get back the full value invested.
