With the inauguration of Joe Biden as the 46th US president on Wednesday 20 January, Donald Trump’s time in the White House came to an end. After four years of an unconventional administration, the presence of the National Guard was needed in Washington DC to ensure a peaceful transfer of power after the invasion of the Capitol building earlier this month.
As president, Trump frequently measured his success against the strength of the domestic economy, often referring to it as “the greatest economy in the history of the world”.
And in his farewell speech, he referred to its resilience in the face of a global pandemic, a crisis which has so far claimed the lives of over 400,000 Americans.
“The whole world suffered, but America outperformed other countries because of our incredible economy and the economy that we built,” said Trump. “Without the foundations and footings, it wouldn’t have worked out this way.”
However, while his administration made considerable strides in unemployment and real wages, it’s hard to determine whether those were directly correlated to his policies or were trickle-down effects from other administrations.
Indeed, the performance of the Dow Jones Industrial Average (DJIA) – a benchmark he frequently referred to – returned 51.77 per cent during his administration, in sterling terms.
Performance of DJIA under Trump
Source: FE Analytics
With his tenure now over, and using data from FE Analytics, Trustnet decided to look back over four years of Trump’s administration, from 20 January 2017 to 20 January 2021, to find out which funds performed the strongest.
Looking across the IA North America, IA North American Smaller Companies, IT North America, IT North American Smaller Companies sectors, the 20 top-performing funds were open-ended strategies.
Performance of all funds under Trump
Source: FE Analytics
The leadership of US stocks – and its technology giants in particular – saw large-cap strategies dominate the top-20 funds, with 17 from the IA North America sector compared with three from IA North American Smaller Companies.
The stand-out performer was the £7.1bn Baillie Gifford American fund, at the top by quite a margin with a total return of 304.11 per cent during Trump’s four years in power.
Managed by Gary Robinson, Tom Slater, Kirsty Gibson and Dave Bujnowski, the five FE fundinfo Crown-rated fund and – like all Baillie Gifford funds – has a strong growth focus.
Using a bottom-up, high conviction stock selection process, half the fund’s portfolio is invested in just 10 names, which means performance generally comes at the expense of higher volatility relative to its peers. However, those 10 names include some of the best-performing US stocks in recent years, such as Tesla, Amazon and Shopify.
Second-placed is the £7bn Morgan Stanley US Growth fund which seeks high-quality, established and emerging US companies with sustainable competitive advantages, strong free-cash-flow and favourable returns on invested capital trends.
Including many familiar high-growth names, it has made a total return of 250.63 per cent.
The Lord Abbett Innovation Growth fund is third-placed and has only really known a Trump administration – having launched in March 2016. Relatively smaller than the other top performers at £134.6m, it has made a total return of 180.01 per cent.
With a return of 160.14 per cent, the £519.2m JP Morgan US Small Cap Growth fund is one of the three smaller companies’ strategies to make the top-20.
Managed by Eytan Shapiro and Timothy Parton, it has seen its size increase by 112.93 per cent in 2020 as investors put capital in US growth names – and increasingly ones with smaller market capitalisation.
While investment trusts do not make the top-performing funds, it must be noted that there are far fewer strategies within these sectors, just nine in total spread between seven in IT North America and two in IT North American Smaller Companies.
Performance of investment trusts under Trump
Source: FE Analytics
However, the top performing trust was a Canadian equity strategy: the £748.9m Morgan Meighen & Associates Canadian General Investments fund, which made a total return of 98.08 per cent during Trump’s tenure.
Canada provides a useful window on the health of the US economy making up around three-quarters of its exports, according to the World Bank.
Canadian equity strategies also tend to have direct exposure to the US market, and this fund is no exception with 23.2 per cent invested in its southern neighbour, including tech giants Apple, Amazon and Nvidia.
The second best-performing trust is the £1.2bn JP Morgan American Investment Trust, managed by Timothy Parton and Jonathan Simon, which posted a total return of 72.77 per cent.
Parton is a growth manager while Simon is value-orientated, combining to create a blend of both styles.
“The concentrated strategy seems especially well suited to a closed-ended fund, where the structural advantages afford more latitude to run concentrated portfolios,” said analysts from Kepler Trust Intelligence.
Rounding out the top-three is the JP Morgan US Smaller Companies investment trust which made a total return of 61.14 per cent.
The £256.9m JP Morgan US Smaller Companies trust is run by Don San Jose, Daniel Percella and Jon Brachle and seeks to identify companies that have strong management teams and are trading at a discount to intrinsic value.