It’s been hard to miss the new flavour of Realpolitik that has taken hold in the Oval Office in Washington since the end of January. Not least in the President of Ukraine’s bruising encounter last weekend in the White House. Whilst President Trump’s diplomacy-by-billy club shocked and appalled some world leaders who thought they were allies with the US, and may have delighted others, it has set the tone for how America will probably deal with the rest of the world for the next four years.
But Donald Trump is just bringing back the politics of practicality, as opposed to the globalist approach where collective moral and ideological conditions drove policy. Trump’s approach has in its early manifestations echoes of the style of Henry Kissinger, who was flexible enough to open channels of communication with avowed enemies such as China and the USSR, whose ideology was anathema just a few years previously. Kissinger’s diplomacy was framed by the politics of practicality and results. Trump did say he would Make America Great Again, and it seems that this is the path he’s decided on to achieve that outcome.
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Which makes the Association of Investment Companies’ North America sector an intriguing investment option. Trump seems to be trying to make progress as though he’s chasing a burning fuse, and for an almost 80-year old man, who eschews exercise and dietary advice, he has a huge amount of energy, which if he transfers into policy, may well see a renaissance in the US economy that would rival the Reaganomics of the 1980s.
Leading sectors across the board
As it says on the tin, the AIC’s North America sector comprises investment trusts that primarily focus on North American equities. This sector offers exposure to some of the world’s largest and most dynamic markets, particularly the United States, which dominates global equity indices. Investors in this sector typically seek long-term capital growth, benefiting from North America’s leadership in technology, healthcare, and other high-growth industries.
The AIC North America sector includes a range of investment trusts that vary in strategy, from broad-based equity funds to more concentrated portfolios targeting specific themes such as technology or smaller companies. It has assets of £18bn under management, according to the AIC, although one caveat is that £12bn is accounted for by Bill Ackman’s activist Pershing Square fund [LON:PSH], which The Armchair Trader has written about in the past.
It will come as no surprise that the sector is heavily weighted toward US equities, with some exposure to Canada, particularly in the natural resources sector. The underlying holdings typically include blue-chip companies such as Apple NASDAQ:AAPL, Microsoft NASDAQ:MSFT, and Amazon NASDAQ:AMZN, as well as smaller high-growth firms.
North American resilience
The sector has generally outperformed other regional investment sectors over the long term, reflecting the strength of the US stock market. The S&P500 and Nasdaq indices have consistently delivered robust returns, driven by strong corporate earnings, innovation, and economic resilience.
The sector saw strong gains in 2023, buoyed by a resurgence in technology stocks and easing inflation concerns. The Nasdaq, in particular, rebounded sharply after a difficult 2022, leading to double-digit returns for many trusts in the sector.
The Federal Reserve’s monetary policy has been a key driver of performance. Interest rate hikes in 2022 and early 2023 pressured growth stocks, but recent signs of stabilisation have improved investor sentiment.
The bywords on everyone’s lips in 2024 was Artificial Intelligence, and the dominance of tech companies in the portfolios of funds in this sector, particularly in AI and cloud computing, has been a major theme. Trusts with exposure to Nvidia NASDAQ:NVDA, Microsoft, and Alphabet NASDAQ:GOOGL have benefited significantly. That said, AI is still open source, and challengers from other parts of the world, such as DeepSeek from China might still challenge American dominance, but, when compared to the UK, Europe and much of the developed world, the US economy has remained robust, supported by strong employment numbers and sustained corporate profitability.
It’s not all gravy, though. Trump’s increasingly isolationist, if not belligerent attitude to the rest of the world might see international customers for US products look closer to home for supply and be forced to innovate and develop domestic industries. Or in the face of US tariffs and sanctions they may look at other suppliers – not least the only country that could conceivably challenge US hegemony in the next decade, China.
Not all plain sailing
Moreover, many of the US’s biggest companies are trading at high valuations, particularly in the technology sector. A market correction could impact the performance of trusts heavily weighted in these stocks. In addition, monetary policy is a concern; although the US has the world’s biggest economy, it also has the world’s biggest national debt and the direction of travel for interest rates still remains uncertain. While inflation has moderated, further rate hikes or economic slowdown could impact the US market performance.
Despite having his feet under the desk in the Oval Office, President Trump might soon learn the meaning of British national bard, Shakespeare’s observation: ‘heavy is the head that wears the crown.’ Although the President has talked of a landslide victory, he entered the White House on the back of the US’s bizarre electoral college system. Half of America, Trump’s new subjects, did not vote for him, and arguably he inherits an America that is even more fractious than in 2016.
Many of those who voted for him did so out of dislike of the other option on the slate, not because they actively like Trump, and if he does not turn things around for the Average American (as opposed to Corporate America) things might turn against him pretty quickly, which might explain the frenetic nature of his first month in office.
Although Trump has his fanatical devotees, the very anti-Trump side of the debate is equally fanatical, with most Americans somewhere in the middle. Trump’s last term in office was stalled by his opponents trying every ruse in the book to frustrate his policies. As a result many of his manifesto pledges, not least “The Big, Beautiful Wall” barricading the US-Mexican border never saw light of day. Arguably, the things he has to fix this time around are more pressing and more serious.
North American Income: Counter-cultural investing
North America is a big, beautiful equity market, and as such the managers in this sector take very different approaches to how they run their funds. For example the £500m North American Income Trust [LON:NAIT] from the Janus Henderson stable aims to provide both capital growth and income, with a tilt towards dividend-paying stocks.
NAIT has been in business since 1997 and so has managed though numerous iterations of American presidents. Its managers, Francis Radano and Jeremiah Buckley highlight that although American stocks are known for their capital growth, the market also provides over one-third of the world’s dividends, and as such the fund seeks above-average dividend income and long-term capital growth, by investing in a portfolio of predominantly S&P500 US companies.
Although many of the funds in the sector are dominated by the ‘Magnificent Seven’ technology stocks, the North American Income Trust’s portfolio looks very different from its peers, instead focusing on US companies from a bygone age (which to be fair, are still global titans) with the likes of Johnson & Johnson NYSE:JNJ, Chevron NYSE:CVX, tobacco stock Philip Morris NYSE:PM and pharmaceutical Bristol-Myers Squibb NYSE:BMY all taking prominent positions in the top-five investments by weighting. Its one tip of the hat to technology is IBM NYSE:IBM, the manufacturer of the floppy disk and credit card swipe strip, a name that doesn’t often come up in conversations about tech companies in the US, being Radano and Buckley’s sixth-biggest position.
JPMorgan American: A new broom sweeps clean
By contrast the £2bn JPMorgan American Investment Trust [LON:JAM] takes a very different approach, and although the fund invests in both value and growth, is currently very tech-heavy, including Amazon, Microsoft, Meta NASDAQ:META, Nvidia and Apple as its top-five exposures with a quarter of AUM in technology. Other sectoral exposures are tech-inspired, making the full portfolio very reliant on the IT industry.
The fund’s managers have a very conviction-driven portfolio. Tesla NASDAQ:TSLA, with Elon Musk pulling the strings in the White House would be an obvious tech-pick, however, fund manager, Felise Agranoff said: “Tesla was the largest detractor. Shares have continued to benefit from investor optimism regarding autonomous vehicles and the belief that Elon Musk’s influence in Washington could favour Tesla. However, we maintain our lack of exposure due to concerns about new vehicles detracting from the sales of the model 3 and model Y lines, challenges with full self-driving, and increased competition and economic pressures impacting profitability.”
Notably, it’s a very new team at the helm of this fund, with Agranoff being the veteran with two years managing the fund under her belt. Her fellow managers, Jack Caffrey, Eric Ghernati and Graham Spence have all been with the fund for less than one year, and it will be interesting to see what new ideas this new management team bring to the fund. Will they be promising jam tomorrow?
Pershing Square: Go big, or go home
The outlier of the sector is the aforementioned Pershing Square Holdings, the biggest fish in the pond, run by the unique, somewhat eccentric, but highly-successful Bill Ackman. As previously reported, Ackman’s fund takes big holdings in companies, maintains his position for a long time and then uses it to leverage change within those companies. The fund also uses gearing to super-charge its portfolio.
With Pershing, it’s ‘go big, or go home’ and Ackman isn’t out to make friends, but influence people. He has not shied away from wading into the culture wars. Sometimes described as ruthless and aggressive, reckless and strategic by equal measure, many of his peers have (off-the-record) criticised him for airing his personal opinions publicly and looking for a fight, even when he can’t win. He’s definitely the kind of captain that would go down with his ship, as opposed to clambering over orphans and widows to get to the lifeboats in the manner of J. Bruce Ismay, CEO of the White Star Line from Titanic.
He sounds like someone else in a position of power in the US.
Below is the performance of a selection of funds over one-year, five-years and 10-years.
AIC North America Sector Performance (to 28th February 2025):
| Fund | 1 Year | 5 Years | 10 Years | Dividend yield |
| North America Income Trust [LON:NAIT] | +25.7% | +58.7% | +185.5% | 3.4% |
| JPMorgan American Investment Trust [LON:JAM] | +15.5% | +155.9% | +322.7% | 0.72% |
| Pershing Square [LON:PSH] | +9.3% | +239.3% | N/A | 1.2% |
| Sector average | +12.3% | +180.1% | +251.7% | 1.3% |
| Source: Association of Investment Companies | ||||
