US stocks continue to attract growth investors despite concerns over market volatility and steep valuations. The S&P 500 tracker has delivered a sterling total return of around 28% in the first 11 months of 2024, but active funds have outperformed, taking alternative approaches to investing.
Several US mega-cap stocks dominate the market, with Apple, Microsoft, Amazon, Alphabet, Meta, Nvidia, and Tesla accounting for nearly a third of the S&P 500 ETF. However, diversification is crucial, as these large-cap names can be vulnerable to trade wars, AI-related risks, or pullbacks.
Small-cap stocks and US banks have been lagging the large-cap S&P 500 index but may benefit from a stable US economy under President Trump’s pro-business agenda. Debt costs are expected to ease, and domestic-focused policies could boost small businesses.
Some standout active funds focus on growth, with Baillie Gifford US Growth outperforming peers despite its high volatility in recent years. Other notable funds include JPMorgan American, which has a significant allocation to the Magnificent Seven, and Brown Advisory US Smaller Companies, which sits in our Top 50 Funds best-buy list.
Investors should consider diversified portfolios, as market fluctuations can lead to significant gains or losses. With the US economy on stable ground, it’s essential to weigh the risks and benefits of investing in different sectors and asset classes.
Source: https://www.investorschronicle.co.uk/content/52d474d0-a111-51a1-89d6-1abd6573a315