Fund Objective

The SG American Growth Fund aims to provide capital growth.

View on Past Performance

In Q308, volatility once again rattled the equity markets as the credit crisis intensified and confidence in the financial system dwindled. The S&P 500 finished down over 8% (in US dollar terms) making it the ninth worst month since 1950. Nearly all the damage happened in September.To prevent a collapse of the financial system, the US government attempted to rush through a proposed $700 billion bailout plan to try to free up bank capital and to restore market confidence.Despite weakened inflation pressures - a result of receding commodity prices - equity markets continued to face multiple headwinds. Unemployment rose to 6.1% whilst home delinquencies were up to over 9% of all outstanding home loans in Q208. Banks' reluctance to lend money to other financial institutions and businesses has hampered the prospects for future economic growth. Corporate earnings revisions continued to sink.

Future Expectations

The fundamental objective for financial markets is for interbank spreads to come down to encourage banks to lend.US economy: expect a deep recession (-3%) in Q408, followed by a continued decline early in 2009. The US consumer (due to household debt / falling house prices / share prices) will continue to be a drag on the economy. Unemployment is likely to increase to over 7%. But, if the US authorities continue to work closely with major foreign governments, the US recession should be short and growth should be positive by Q209. Financial markets are likely to anticipate this and recover ahead of it.Oil: $75 per barrel might be the equilibrium price at which there is no speculative premium or discount. Commodities in general are likely to suffer during a recession and see sharp declines, as a consequence of this the fund is underweight the Energy sector.The US dollar continues to be fundamentally undervalued and we expect it to rise against most of the major currencies, including sterling, which should benefit UK investors invested in US equities.

Fund Details