AIB Govett's US Opportunities fund is focusing on smaller cap stocks in the technology, healthcare...
AIB Govett's US Opportunities fund is focusing on smaller cap stocks in the technology, healthcare and telecoms sectors.
The Oeic fund, which is managed by Giles Knight, has around two thirds of its portfolio in stocks with a market cap of less than $3bn with around 10% to 15% in large caps.
Knight said US telecoms firms are benefiting from the falling prices of telecoms services, leading to increased usage by consumers.
As a result the portfolio is invested in stocks including Spectrasite and Andrew Corporation.
In the small cap technology arena, Knight is keen on businesses such as Atmel and C&D Technologies with Knight seeing the sector benefiting from the growth of the internet and broadband technology.
The fund has 2.9% in wireless telecoms services and 2.8% in internet software and services.
The Oeic is ranked six out of 89 funds in the North America sector over one year on growth of 64.4%. Over three months the fund is ranked 10 out of 89 on growth of 15.5%.
Knight said: "Govett US Opportunities is an aggressive growth fund with a multi-cap remit as we own companies like AOL, Cisco and Microsoft as well as other smaller cap stocks. We take a bottom-up stockpicking approach looking at factors such as growth in earnings, revenue, earnings momentum and also share price momentum."
The fund looks for stocks with return on equity of above 15%, sales growth in excess of 20% and earnings growth of more than 15%. Knight is also looking for firms with low debt levels and barriers to entry in their chosen markets. He is running a 55 stock portfolio.
Knight said with the baby-boom generation in the US ageing, there will be increased demand for healthcare. He added the state health system in the US is generally not able to offer access to the latest healthcare technology and advances in treatment which should be of benefit to private healthcare companies which can meet demand for this.
Among the smaller cap healthcare stocks Knight holds is Lifepoint Hospitals.
He added: "The average time for a drug to be approved in the US has gone down from seven years to four years and many drugs such as Prozac are coming off patent. This is a positive for smaller pharmaceuticals firms as the big companies are going to have to pay up for any firm that looks like it is going to produce a blockbuster drug.
"The large companies will also have to increase investment in their own research and development."
The fund has a 5.7% exposure to hospitals and hospital supplies as well as 6.7% in healthcare equipment and supplies.
Govett US Opportunities also has exposure to fund management firms such as Blackrock and LeggMason which Knight said are benefiting from the continuing strong demand for mutual funds in the US.
Legg Mason is in the fund's top 20 holdings and makes up 2.3% of the portfolio while 2.7% is exposed to Blackrock.
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