Mail on Sunday: Is America’s Bubble About to Burst – Or Can You Cash in on a Biden Bounce as Democrat Takes the ReinsGeneral/ 25 January 2021
In the last few days, the world’s eyes have been on the United States as the presidency has transferred from Donald Trump to Joe Biden. Thankfully, Biden’s inauguration has taken place without any repeat of the violence seen earlier this month. Investment experts believe that under Biden’s presidency, the wind is set fair for more Washington spending and a return to growth when the US exits the pandemic. But is now the time for UK investors to invest in US stocks?
Picking the right sectors is crucial:
With the US market riding so high, it is vital to pick the right sectors and stocks to get the most out of any US economic recovery. Hugh Gimber, global market strategist at investment house JP Morgan Asset Management, believes the new administration could herald a change of fortune for parts of the stock market left behind by the technology boom. He says: ‘While big technology stocks have done well, I believe the balance could now shift with some leading companies becoming stock market laggards – and vice versa.’ He argues this would mean unloved stock market areas such as finance, utilities and renewable energy getting a boost.
Sam Dickens is a portfolio manager at trading platform IG. He is also a fan of US infrastructure. He explains: ‘Investing in infrastructure helps to create jobs, which in turn boosts consumer spending.’ Over the long term, it could help to increase connectivity between rural and urban areas and provide equal access to key utilities; helping to reduce income inequality. ‘The benefits of infrastructure spending, coupled with the global need to actively combat climate change, mean sustainable infrastructure and green energy have become an increasingly appetising opportunity for investors.’
Funds that could provide a Tailwind:
Investors who want to capture a potential ‘Biden bounce’ could consider a tracker fund that holds a spread of companies listed in the US. For those who want funds with a renewable bent, James Carthew, head of investment trusts at QuotedData, suggests three funds operating in the US market: US Solar, Ecofin US Renewables and SDCL Energy Efficiency. All three are currently doing deals in the US, particularly in the solar energy area.