Biden’s first 100 days: fund picks to invest in the US

As a milestone date approaches, our experts consider the US president’s impact on markets.

The 100-day mark of a presidency is somewhat of an arbitrary milestone which can offer a glimpse of what the president’s priorities are.

For President Joe Biden, who will reach the milestone in the end of April, his tenure in the White House has so far been defined by a huge $1.9 trillion coronavirus relief package and ramping up vaccination efforts and tackling climate change.

Since the inauguration of President Joe Biden on the 20 January, US equities delivered excellent returns with the S&P 500 rising 10.5% and the wider MSCI US Broad Market Index, which captures the performance of nearly 3,000 companies across the market cap spectrum, increasing 9.7%. The MSCI World index is up 8.4%.

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Teodor Dilov, Fund Analyst, interactive investor, says: “The coronavirus crisis meant that President Biden could afford little time to settle into his White House residence, but get straight to work to address the coronavirus crisis which has come at great cost from both an economic and a humanitarian standpoint.

“His $1.9 trillion Covid-19 support package in tandem with an additional promise of $2 trillion in infrastructure spending has led to upgrades in consensus forecasts for US growth this year, with 7% growth now expected.

“In a classic case of under promise, over deliver, Biden has smashed his earlier goal of getting 100 million shots in arms well before his 100th day on the job, with 200million vaccines administered. As the economy continues its recovery, the demand for cyclical businesses increased and as a result undervalued assets outperformed growth businesses over the period.”

Climate has been a key focus of the Biden administration's first few months in office. As well reversing predecessor Donald Trump's decision to withdraw the US from the Paris climate pact, President Biden brought together 40 world leaders to the virtual Leaders Summit on Climate and pledged to cut the US’s carbon emissions by 50-52% below 2005 levels by the year 2030.

Rebecca O’Connor, Head of Pensions and Savings, interactive investor, says: “Joe Biden is committed to the energy transition – almost immediately signing the US back up to the Paris Climate Agreement after he became president. He believes a shift to a green economy will bring benefits, including jobs. President Biden also recognises there is a huge amount to be done globally, not just in the US. He wants the US and other western economies to lead the way. Through ISAs and SIPPs, it is possible for investors in the UK to invest in this shift both in the US and other countries.”

Fund picks to invest in the US

Teodor Dilov, Fund Analyst, interactive investor, says: “We like Artemis US Smaller Companies managed by Cormac Weldon, who runs a concentrated portfolio of typically between 40 to 60 small-cap companies (up to $10 billion in size). He starts by looking at the US economy to identify areas of the market that are benefiting from thematic trends, as well as those where conditions may not be favourable.

“Once a stock has been identified as worthy of closer inspection, in-depth, bottom-up analysis and financial modelling are used to develop and test the investment case. Currently, the manager finds most opportunities in the Financials, Support Services and Software sectors, with some of the top 10 holdings including the independent broker-dealer LPL Financial (NASDAQ:LPLA), the agricultural machinery manufacturer AGCO (NYSE:AGCO) and Alliance Data Systems (NYSE:ADS) - provider of loyalty and marketing services.

“For those who would like to gain exposure through an efficient passive product, we like Vanguard US Equity Index. It aims to track the performance of the S&P Total Market Index through buying most of the underlying stocks, but also optimize its holdings of some of the smaller companies to generate performance that matches the benchmark, whilst keeping costs to a minimum at 0.1%, making it very attractive option.”

“For ESG conscious investors, we like Brown Advisory US Sustainable Growth, which excludes companies that defy the United Nations Global Compact Principles; derive any of their revenues from controversial weapons; conduct animal testing for non-medical purposes; own fossil fuel reserves; or generate power from fossil fuels.

“The fund also imposes limits on companies that derive more than 5% of revenues from tobacco, alcohol, gambling and military equipment. The managers then seek to identify primarily US companies that have prospects for above average earnings growth in the future, and effectively implement sustainable business strategies that drive earnings growth.