Archived article

Please note that tax, investment, pension and ISA rules can change and the information and any views contained in this article may now be inaccurate.

Upside stateside: the investment trusts to help you tap into Uncle Sam’s best opportunities

While the US equity market has had a stunning rally off the Covid lows, with many commentators seeing a bubble ready to pop, investors simply cannot afford to ignore what remains the world’s largest and most liquid stock market.

For those retail investors that just don’t have the time to monitor news flow from individual companies, entrusting cash to a professional fund manager with proven pedigree in backing US winners can be a sensible option. While past performance is no guarantee of future returns, investment trusts with formidable long-run performance records are a great place to start.


Within the Association of Investment Companies (AIC) North America sector, the best performer on a 10 year share price total return basis is JPMorgan American (JAM), which has generated a stellar 390.9% haul.

Managed by Jonathan Simon and Timothy Parton, this capital growth-focused trust aims to outperform the S&P 500 index and we like its explicit exposure to both the growth and value investing styles, which leaves ‘JAM’ looking well-equipped to navigate future style rotation in what is a frothy-looking US market.

Top portfolio positions at the end of August included Microsoft, Apple and Google-owner Alphabet, not to mention the likes of Amazon, Bank of America and drug company AbbVie.

A more recent portfolio addition is Deere & Co, a leader in agricultural equipment including tractors which is developing cutting-edge technology, including using AI to drive automation, which significantly increases productivity for farmers.


Investors seeking an income stream from across the pond could look to The North American Income Trust (NAIT), trading on a 3.7% yield and with a decade-long 229% share price total return according to AIC data.

Steered by Abrdn (ABDN) duo Fran Radano and Ralph Bassett, NAIT invests for above-average dividend income and long-term capital growth, mainly from a concentrated portfolio of dividend paying S&P 500 stocks.

NAIT also has licence to invest in Canadian stocks and US mid and small caps (valued at less than $10 billion) as a way of accessing diversified sources of income, which is also augmented by option writing activity.

Other products in the AIC North America sector include a fund with a focus on disruptive US growth companies, both listed and unlisted. Baillie Gifford US Growth (USA) was launched in March 2018 by the manager which runs the hugely popular Scottish Mortgage Investment Trust (SMT).

Baillie Gifford US Growth’s managers Gary Robinson and Kirsty Gibson look to identify and own the exceptional growth companies in America, with Amazon, Tesla and Moderna passing muster with the pair.

Another vehicle is BlackRock Sustainable American Income (BRSA), formerly BlackRock North American Income Trust, which retains its income focus but has also incorporated a sustainable investment approach, reduced the number of holdings and removed a previous focus on large caps to allow the managers flexibility to introduce more mid caps into the portfolio.


Two trusts inhabit the AIC North American Smaller Companies sector. JPMorgan US Smaller Companies (JUSC) has generated a stellar decade-long return of 456.56%.

Research firm Kepler argues the trust offers investors ‘a measured approach to a small cap sector that is increasingly characterised by volatility stemming from “meme” stocks and expensive, low-earning companies.

‘Yet by only investing in quality companies, the managers have created a generally resilient portfolio. The JUSC team believe that their portfolio of reliable companies will be carried by the strength of the companies’ earnings and management.’

Brown Advisory US Smaller Companies (BASC) has hitherto lagged its sole sector peer with a 255.44% haul and trades at a 12.2% NAV discount that could interest bargain hunters. Formerly Jupiter US Smaller Companies, the latter trust’s name was changed in May 2021 after Brown Advisory took over the mandate on 1 April.

We are positive about its prospects under new manager Chris Berrier, which is why we added it to our Great Ideas list in July. Berrier’s proven process sees him hunting for opportunities within an ‘advantaged universe’ of companies with pricing inefficiencies he can exploit; analyst coverage becomes thinner the further down the market cap spectrum you go.

The Baltimore-based stock-picker aims to find firms that can demonstrate consistent growth ahead of the market over the long run, usually by opening up a new market, dominating a niche, or by having a differentiated business model or product.

He focuses on companies that possess what he describes as ‘3G’ qualities: durable growth, sound governance and scalable go-to-market strategies. Unsurprisingly, such high-quality assets pop up on the radars of potential bidders before too long, and Berrier’s small cap strategy routinely benefits from premium-priced takeovers.

Companies passing muster with Berrier include the likes of Workiva, a SaaS platform expanding its capabilities in the financial management space, mobile games developer Zynga, and solid waste-to-recycling services company Waste Connections.

In June, Winterflood analyst Emma Bird wrote she could envisage a re-rating for the trust in time, adding that in virtual meetings with Berrier, the Winterflood team had been ‘impressed with the depth of the firm’s research process and the breadth of the wider investment team.

‘In the diverse marketplace of US smaller companies, we consider this a considerable advantage. In our opinion US small caps are well-suited to a listed, closed ended fund and we would expect the new investment teams to take advantage of the structure in time by embracing greater liquidity risk and deploying gearing when appropriate.’

‹ Previous2021-09-30Next ›