In November former president Donald Trump won the race to the White House to become the 47th new president of the United States in January – and only the second president to ever sit two non-consecutive terms.
Polls suggested the race between Trump and current Democrat Vice-President Kamala Harris would be a coin flip, however Trump came away with a decisive victory. He’ll now take over running the country on 20 January 2025.
How has the stock market reacted?
Since the 2024 US Election took place on 5 November the US stock market has performed very strongly, returning 6.87%* in just over a month (Source: Lipper IM to 9 December). The Russell 2000 index, which focuses on smaller companies that are more domestically focused, has returned 7.69%.
Remember though, past performance isn’t a guide to the future.
The Trump trade
The market has taken well to Trump's policy intentions and generally see them as good for investors, at least in the short term.
Trump’s promised 60% tariffs on imports from China as well as 10% tariffs from all other countries. The hope is this spurs reshoring of production to the US.
He’s also promised tax cuts, not just for consumers but also for businesses. The expectation is that consumers will have more money to spend on goods and services and businesses will be paying less tax on their profits. This should have a positive impact on company profits.
Trump’s also made deregulation a key policy for his second term. The aim is to reduce federal oversight in key industries like energy and healthcare. The hope is that lower regulation will attract investment and create jobs.
Some areas that Trump could focus on is financials, potentially loosening the regulation banks face requiring them to hold a certain amount of capital. This could mean they could lend out more money which can be good for business investment.
Energy is also on table with Trump likely to eliminate restrictions on offshore drilling.
What are the potential issues?
Although this might sound good, there could be some negative knock-on effects to these policies.
The most obvious cause of concern will be inflation.
Inflation had risen significantly in the aftermath of the pandemic with the Federal Reserve (Fed) increasing interest rates in attempt to cool the economy and lower rising prices.
That battle seems to just about be over with inflation now at 2.6%, and most people expect the Fed to continue cutting rates going forward.
However, with Trump’s proposed policies, especially on tariffs and tax cuts, there are concerns this could spike inflation again.
Businesses might decide to pass on the extra costs of importing goods to consumers and if consumers have more income from paying less tax, they could ramp up their spending.
This has the potential to undo the last 18 months of work in getting inflation back near to the 2% target. But there are also some arguing that these tariffs might not be as inflationary as everyone is suggesting.
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Job market remains strong
A closely watched indicator informing the Fed’s interest rate decisions is the jobs report.
The US added 227,000 jobs in November well ahead of the October where they added just 36,000. After October, economists were starting to think the job market was beginning to slow and this could cause the Fed to cut interest rates more quickly. But November’s data suggests the opposite as the economy appears strong.
However, further rate cuts are still likely to come in 2025.
How have the US Wealth Shortlist funds performed?
Investing in these funds isn’t right for everyone. Investors should only invest if the fund’s objectives are aligned with their own, and there’s a specific need for the type of investment being made. Investors should understand the specific risks of a fund before they invest, and make sure any new investment forms part of a diversified portfolio.
This article isn’t advice. Investments and any income they produce will rise and fall in value, meaning you could get back less than you invest. If you’re not sure if an investment is right for you, ask for financial advice. Remember, past performance isn’t a guide to the future.
For more details on each fund and its risks, you can use the links to their factsheets and key investor information below.
The strongest performer of our Wealth Shortlist US funds over the last year was the Artemis US Smaller Companies Fund.
The fund rose 53.01%* over the past 12 months, outperforming the fund’s benchmark the Russell 2000 and the IA North American Smaller Companies sector average.
Our analysis shows that managers Cormac Weldon and Olivia Micklem’s stock selection was the main driver of the fund’s impressive returns over the year.
Typically, we expect given the fund to hold up better when markets are falling given its quality bias, but it can lag when markets rise. Stock selections in the technology and utilities space have been big contributors to the fund’s strong returns.
The weakest performer over the past 12 months was FTF Royce US Smaller companies, returning 25.31%, behind the IA North American smaller companies sector average and Russell 2000.
We don’t expect all the funds on the Wealth Shortlist to perform in the same way. We think it’s important for investors to build a portfolio filled with managers who have different approaches and investing styles to help generate long-term returns.
Annual percentage growth
30/11/2019 to 30/11/2020 | 30/11/2020 to 30/11/2021 | 30/11/2021 to 30/11/2022 | 30/11/2022 to 30/11/2023 | 30/11/2023 to 30/11/2024 | |
|---|---|---|---|---|---|
Artemis US Smaller Companies | 16.23% | 25.45% | -15.69% | -5.37% | 53.01% |
FTF Royce US Smaller Companies Fund | 3.87% | 27.27% | 1.32% | 0.83% | 25.31% |
IA North American Smaller Companies | 15.94% | 21.07% | -7.94% | -5.07% | 32.66% |
MSCI North America | 15.52% | 28.26% | -0.79% | 7.00% | 33.57% |
Russell 2000 | 10.06% | 23.14% | -3.36% | -8.34% | 35.89% |