Managed funds switch from 'Trump trade' favourites
Some of the actively-managed investment funds that have performed the best since the November 8 US presidential election are switching from "Trump Trade" bets on financial and infrastructure stocks into beaten-down sectors such as retail, clothing or biotech. The managers say those sectors now have a lot of upside while a rally fuelled by expectations President Donald Trump's administration will cut taxes and boost infrastructure spending has run its course because of growing doubts that the new administration can deliver on those promises any time soon. "We're taking some money off the table," said Scott Goginsky, a co-portfolio manager of the $24.8m Biondo Focus Fund. The fund gained 25.6pc between Election Day and the end of March, according to Morningstar data. Goginsky's fund, which counts sportswear brand Under Armour among its largest holdings, has been selling shares of large-cap financial companies and buying "brands and companies that still have pricing power when Amazon is taking over everything", he said.
Shares of Under Armour lost 54pc over the last 12 months ,in part because of increased competition with Nike for shelf space at retailers.
Most of the portfolio managers that topped post-election performance charts moved into financials and infrastructure stocks before November 8 because they looked cheap, not because they thought Trump would win.
With the price-to-earnings ratio of the benchmark S&P 500 near the high end of its historical range, the broad market has baked in deep tax cuts that look less likely after President Trump's attempt to pass a new healthcare bill shattered, fund managers say.