Artemis to launch new US funds
Next month the following funds will be launching, which we anticipate will be available on Cofunds, upon launch:
Artemis US Equity – Chelsea generic risk rating 7
This fund has between 60-80 stocks. This is a “Core” US equity fund with a large and mid-cap bias.
Artemis US Select – Chelsea generic risk rating 7.5
This is a concentrated 'best ideas' fund with 40-60 stocks invested across the cap spectrum.
Artemis US Smaller Companies – Chelsea generic risk rating 8
Similar to Cormac Weldon's Equity and Select funds, with 50-70 stocks focusing on smaller companies funds.
Artemis US Extended Alpha – Chelsea generic risk rating 6
This fund has a split of around 60-95 long stocks, and 50-95 short stocks, and carries a performance fee of 20%. A high watermark has been applied.
Artemis US Absolute Return – Chelsea generic risk rating 5
This fund is a split of around 40-70 long stocks, and 50-95 short stocks, and carries a performance fee of 20%. A high watermark has been applied.
The 'I' class is available through Chelsea FundStore with 0% initial charge, a charge of 0.75% annual management charge and a typical midday pricing time.
Where are they investing?
Three main sectors that the fund managers are going to invest in are housing, oil and gas, and technology.
The recent recovery over the past 12 months has slowed in the US, with mortgage rates rising and poor weather conditions disrupting progress. Although student debt is high, Artemis project that first time buyers will soon return to the market, which will drive the recovery, especially with wage growth finally kicking in.
The Energy Information Administration (EIA) recently published figures that projected a healthy growth in both oil and gas production. By 2017 the EIA anticipate that the US will be producing the same amount of oil in 1970s. It has also projected that shale oil production will continue to increase, which is a real recipe for making money.
William Warren, of Artemis fund managers, looks at the technology sector and is currently interested in growth stocks. With capital return and dividends increasing on technology stocks, technology capital expenditure is really starting to kick in.
What do we think of these new funds?
Juliet Schooling Latter, research director at Chelsea, met with Artemis. “It was clear that the strong US team will continue their good track record that they gained at Threadneedle, as they have refined the investment process together over the past 12 years.”
“The economic recovery in the US was unexpectedly derailed in the first quarter of this year, as GDP growth came in at an underwhelming 0.10%. This has largely been put down to the icy weather at the start of the year, suppressing both productivity and consumption.” This appears to have been a temporary blip, with the US economy resuming its upward trajectory in the second quarter.
Having said that, strong GDP growth does not always make for a vibrant stock market. With the S&P reaching all-time highs, valuations looking full and corporate profits, as a percentage of GDP, at post-war highs, it is hard to see the US market making headway without improved earnings growth. The bad news is that corporate earnings are flat. This will likely change only if American CEOs increase investment, but this may adversely impact margins in the short term. So for the moment, until we can see that earnings are going in the right direction, we are more cautious on the US stock market than we have been for some time.