Infrastructure
Russ Mould, investment director at AJ Bell:
“Trump is pro-infrastructure spending and has pledged to inject hundreds of billions of dollars in fiscal stimulus. UK firms that could benefit are Wolseley, National Grid, Hill & Smith, Ashtead and CRH.”
For investors looking to invest in funds rather than individual companies, Ryan Hughes head of fund selection at AJ Bell says they could consider Lazard Global Listed Infrastructure and First State Global Listed Infrastructure:
“Lazard Global Listed Infrastructure takes a global approach and currently has about a third of assets exposed to the US. The main exposure is to US rail roads which could benefit from increased freight traffic should Trump go ahead on his plan to grow the oil and coal industries.
“First State Global Listed Infrastructure has 50% of assets exposed to US infrastructure with exposure to themes such as railroads and energy.”
Defence
“Trump also wants to raise the military spending cap, thereby creating a bigger defence budget,” says Russ Mould. “UK firms that stand to benefit from this are BAE Systems, Meggitt and Ultra Electronics.”
From a fund perspective, Ryan Hughes says: “Finding specific defence exposure is harder via funds. However, as an alternative, people could look at the Artemis US Absolute Return Fund. This takes a long / short approach and is therefore able to make money from both long and short positions. Given the nature of Trumps policies, it may create quite a large opportunity set for this type of strategy to profit from. At the very least, if you are nervous of US markets now, this could be a good way of keeping some exposure but without being fully exposed.”
Pharmaceuticals
“Drug stocks have already started to rally following Trump’s victory, purely because Clinton’s price cap strategy is no longer a threat,” says Russ Mould. “Shire, GlaxoSmithKline and AstraZeneca are firms that could continue to benefit from this trend, or specialist investment trusts such as Worldwide Healthcare Trust and Biotech Growth Trust.”
In terms of funds, Ryan Hughes highlights AXA Framlington Health as an option worth considering: “AXA Framlington Health invests in pharmaceutical, biotechnology and healthcare firms globally but it has a 75% exposure to the US market. They have huge experience investing in this space and the team has a healthcare background giving them excellent insight into this sector.”
Table 1:
Election year | Republican winner | Dow Jones performance in first year of office after switch to Republicans |
1952 | Dwight D. Eisenhower | -3.8% |
1968 | Richard M. Nixon | -15.2% |
1980 | Ronald Reagan | -9.2% |
2000 | George W. Bush | -7.1% |
Source: Thomson Reuters Datastream