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Baillie Gifford US Growth: A rising star in North America

Baillie Gifford US Growth: A rising star in North America

With a month to go to the US Presidential Election – the event that it seems most of 2024 has been building up to – we revisit the Association of Investment Companies’ North America sector.

Earlier this year The Armchair Trader wrote about Bill Ackman’s activist Pershing Square [LON:PSH] investment trust and the JPMorgan American Investment Trust [LON:JAM] managed by Jonathan Simon, which were both flavour of the month at the time.

However, top of the pile currently is the Baillie Gifford US Growth Trust [LON:USA].  The fund returned +40.8% over the last year (to 4th October) against a sector average of +30.2%. The AIC North America sector has seven constituents with Pershing and JPM in second and third position over one-year respectively.

Despite the hype surrounding the election, and different partisan factions depicting economic Armageddon across the world should their prospective candidate not enter the Oval Office, the US economy has been, on a GDP growth basis, consistently growing. Since January 2017 GDP growth has grown year-on-year at an average of 2.2% to 2.3%, with the massive outliers being the Covid lockdown period, where growth contracted nearly 30% when lockdowns were instituted, but then sprang back by more than 30% when lockdown restrictions were lifted. 2022 was also a negative GDP growth year.

US Economy is strong, despite what Americans think

Employment has also been strong in comparison to other economically developed countries.  Last week the US said that it had added nearly a quarter-of-a-million new jobs in September, which has made economic analysts even more positive about the world’s biggest economy. However, the biggest risk in the US economy has been inflation, and its knock-on to cost-of-living expenses for ordinary Americans.  Peaking at 9.1% during Biden’s term, the highest since 1981, and a persistent and dogged problem for the Federal Reserve, it has snowballed to become a significant issue during the election. Wages have not kept pace with inflation, which is making people feel poorer, and despite it not being technically true, many Americans are quite pessimistic about the economy of their own country, believing that they are in recession.


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