Disclosure – Non-substantive Research
This is not substantive investment research or a research recommendation, as it does not constitute substantive research or analysis. With this commentary, Kepler Partners LLP does not intend to influence your investment firm's behaviour.
Large-cap technology stocks have dominated global markets in recent years, especially in the US where the FAANGs (Facebook, Amazon, Apple, Netflix and Alphabet) have reigned supreme. Combined, the FAANGs and Microsoft currently make up 12% of global equity markets while also having been amongst the best-performing companies globally. Yet we think the future doesn’t look as bright for these giants, with a series of antitrust suits on the horizon and declining tailwinds from COVID-19 lockdowns. That said, these issues don’t reflect a poor outlook for the rest of the US market. In fact, we think investors have much to be excited about in the US. With substantial amounts of pending fiscal stimulus as well as strong consumer and corporate sectors, it may simply be time to look for opportunities beyond the conventional FAANG-heavy strategies. Below we outline the current state of the North American sectors and what they offer. We think they offer plenty of opportunities for those looking to diversify away from mega-cap tech, with some trusts having generated enviable returns over 2020 while still trading at a discount today.
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