從優質股票投資的角度分析結果（只供英文版）

Q How much is your thinking influenced by political elections? What is your reaction to this election result?

From an investment perspective, one can't discount the role that governments play in the economy and ultimately how that transmits through to financial markets. So, whilst we are unequivocally bottom-up investors focused on company fundamentals and company prospects, it is important to keep an eye on political developments, especially in a world where geopolitical tensions are rising, and risk is developing.

Regarding the US specifically, it is important to stress the context of where we were in the broader cycle as we went into the election. The US economy has been growing very strongly. We've had very low levels of unemployment, a very strong stock market and we're starting to see the first signs of a downward trajectory in interest rates, so in essence the world is teed up for a potentially softer environment juxtaposed against potential industry support. It is important to interpret any policy changes through that lens.

Q Are there any relevant sector or company specific headwinds and tailwinds you expect as a result of Trump’s re-election? Specifically from a Quality perspective.

It is too early to make specific comments around what could happen as the particulars around all of Trump's policies will only be revealed over the course of the next couple of months with him entering office in January. There are three key factors that we are mindful of as investors, with two positive and one negative. Trump is likely to reduce the amount of regulation sitting in the economy, which is obviously pro-business and friendly towards innovation, which is ultimately good for companies that innovate and spend a lot of money on innovation. Secondly, Trump has promised lower rates of taxation, which is supportive of equities in general, but it leads to the negative point; this all needs to be funded.

We are concerned about those policies perhaps creating a little more inflation, and the bond market – which will ultimately be the arbiter to the degree to which Trump can enact some of these policies – has already responded through higher yields. These policies also reinforce the idea of US exceptionalism, which – given our significant allocation to US equities – certainly benefits us from an investment perspective. Life may get more difficult for some of the trading counterparts of the US, with China in particular, Europe and emerging markets all potentially coming under pressure, but we are not heavily invested in these areas.

Q Do you envisage any changes to Big Tech regulation from the new administration?

There are a couple of big companies that have faced some degree of regulatory scrutiny recently, with Visa¹ facing a suit from the Justice Department surrounding its debit cards and Alphabet facing a possible ruling regarding its monopoly status. Under a Trump administration, we believe some of these headwinds could lift as part of a more friendly business environment. Other jurisdictions may take a slightly dimmer view, such as Europe, but our initial view is that this result is positive for tech.

Q Is there anything else that you think will have an impact on the quality portfolios that you manage? Have there been any election driven changes to your portfolios?

Ultimately, investing is a broad puzzle, and this is quite clearly a chunky piece in terms of trying to solve that puzzle. Given that we are in a declining interest rate environment with a softening economy, Trump’s policies may alter the trajectory but not the path. Disinflation may be temporarily halted, which would feed back into the portfolio, and one needs to assess what that means for company fundamentals and earnings growth and cash flows.

Currently, we can see some positives and we can also see potentially some counterbalancing forces to that, but not enough to change our portfolios in order to position ourselves in a different way. Broadly, we can see more support for our holdings than headwinds. Perhaps one area that could come under pressure would be consumer staples and pharmaceuticals, which are obviously very defensive sectors.

Q How do you see the outlook for Quality from here?

It is worth revisiting Trump’s first term. There was a short-lived Trump-driven reflation trade in 2016 at the start before quality fundamentals returned to the fore and were rewarded again in 2017. Looking at the environment now, it's fair to say that some parts of the market have performed very well on a two or three day basis. However, these have been in what we would describe as lower quality and cyclical parts of the market, such as steel, marginal banking companies such as home loan providers, and industrials, with downside risks to the economy replaced with expectations of supportive Trump policies.

The rally may ensue in some of these lower quality parts of the market, but it’s difficult to know how long that could last because it’s ultimately the earnings resilience of good businesses that one should look to underwrite. Whether the current earnings prognosis is still as robust in six months for these companies is unclear.

Where it is possible to have more confidence is with quality companies. A slightly firmer economy means that it’s possible to have a high degree of confidence in companies that are well positioned to continue to be able to deliver the growth outcomes beyond an additional boost that comes from some excitement around this single election event. Ultimately, that is what matters to quality investors. We are looking to understand what is going to cause the long-term compounding and we want to make sure that we can underwrite that with a high degree of clarity. At this point in time, we think a lot of businesses that have been overlooked by the market – where the growth has not been appropriately rewarded and where the prospective returns are still reasonable – is exciting for us.

Visit the US election hub

¹ This is not a buy, sell or hold recommendation for any particular security.