The FSA Spy market buzz – 19 May 2023
HSBC Private Bank is hiring, an AI ETF comes to market, Nasdaq rally, top performing funds, venture capital woes, Dimon’s ironic short ban, Alibaba’s cloud is freed and much more.
US equities have enjoyed a decade-long bull market. The benchmark S&P 500 has posted a 229% cumulative return since late March 2009, according to FE Analytics data. There have been brief interruptions during its otherwise relentless surge – most notably in early 2016 and during the final quarter of last year – but the US stock market has acted both as a safe haven for investors and an opportunity for wealth generation.
The massive $400bn Vanguard S&P 500 exchange traded fund (ETF) has ridden that extended market rise since its launch in 2010. Actively-managed funds with more exclusive investment styles and strategies – such as growth or value – have struggled to match, let alone outperform, passive funds such as Vanguard’s.
Lower fees and an apparently one-way bet on market direction fuelled by an accommodative US Federal Reserve has been highly supportive of index-trackers.
However, sentiment seems to be changing about the prospects for US stock prices and global markets in general. Fears that slower economic growth might turn into a recession has induced greater caution, and less confidence.
FSA asked Darius McDermott, managing director of Chelsea Financial Services and Fund Calibre to compare two US equity products, one an actively-managed fund with a growth style and the other a passive exchange-traded fund: the Axa World Funds Framlington American Growth Fund and the Vanguard S&P 500 ETF.
Part of the Mark Allen Group.