Page 16 - DIY Investor Magazine February 2018

As a UK investor, reading the news coverage in 2017 can be troubling. When we look at valuation, it teeters from undervalued to overvalued in the court of public and professional opinion.
This is despite forward valuations being just ahead of long-term averages. J.P. Morgan Asset Management research shows that whether viewed by price-to- earnings, dividend yield or a range of other valuation ratios, the S&P 500 index is within a reasonable range of valuation norms (see chart)8. We are a long way from 666, and it is fair to ask if we are in the latter stages of the economic cycle, but it is not too late to invest in the US. Indeed, it would be a mistake to exclude exposure to the world’s largest economy from your portfolio.
Timing is key, certainly. Those who bought in 2009 may be pleased with their foresight.
However, J.P. Morgan Asset Management research suggests that only those who stayed invested will have benefitted meaningfully. Did you know that of the ten US bull markets since the 1930s, three returned significantly more than the current run, and two were significantly longer9? In other words, it may be too early to sell, and there may still be opportunities to buy if this rally comes close to replicating either of the periods from 1949-1961 or 1987-2000.
The question turns to ‘what’, not ‘if’, a UK investor should buy to gain US exposure. We believe that a local tends to know the best route. With more than 40 analysts in New York, focused on fundamental research and first- hand company visits our US presence allows us to find value in the world’s most popular investment market.
The JPMorgan American Investment Trust plc and JPMorgan US Smaller Companies Investment Trust
plc look for well-run companies with attractive and sustainable profits. So, regardless of the current bullish run, our range of trusts and approach to picking high potential opportunities are targeted at giving investors a sustainable edge in up and down markets.
1. Source: J.P. Morgan as at July 2017
2. Source: Political Ticker as at 6 March 2009 3. Financial Times - Number games: was 666
low enough in 2009? John Authers,
7 March 2014
4. Source: Google Finance as at July 2017
5. Financial Times - “US blue-chips’ double-digit
earnings set to continue”, Nicole Bullock,
8 August 2017
6. Source: Factset as at 4 August 2017
7. Forbes - “The Fed Said The Stock Market
Is Running On Fumes, A Brief Look At Fed
Market Calls”, 28 June 2017
8. JP Morgan Asset Management, Guide to
the Markets, Slide 45, as at 30 June 2017 9. FT Adviser – “Stay in it for the long term”,
JP Morgan Asset Management, 2 August 2017
This is a promotional document and as such the views contained herein are not to be taken as an advice or recommendation to buy or sell any investment or interest thereto. Reliance upon information in this material is at the sole discretion of the reader.
DIY Investor Magazine | Jan 2018 16