Miton's Hugh Grieves believes the US Opportunities fund's lack of exposure to FAANGs will stand the fund in good stead as the market approaches "peak FAANG".
Although many of the funds in the North America sector have done well over the past couple of year because of their FAANG holdings, which have been the main drivers of performance for US markets, Grieves said the fund has shown it can perform well without being driven by the FAANG stocks.
The £570m fund, which recently won in the North American category at the Investment Week Fund Manager of the Year awards, has returned 77% over the three years to 31 August, according to FE, versus returns of 70% by the IA North America sector and 74% by the S&P 500 (in sterling terms).
Meanwhile, the top-performing fund in the IA North America sector, the £1.9bn Baillie Gifford American fund, has returned 151% over the same period. It includes Alphabet, Amazon, Facebook and Netflix in its top ten holdings.
Nevertheless, Grieves is confident the FAANG outperformance cannot last forever and is comfortable excluding them from his portfolio.
"Maybe we have reached peak FAANG based on how fast and how far they have already come," he said.
"I do not expect them to carry on pulling the whole US market along with them. The US economy is also accelerating and that benefits non-tech companies so there could be a rotation into the broader market."
He said investors were expecting the five stocks to "go up forever" and that the companies would be sharply hit if they disappointed on results.
Facebook and Netflix have already seen share price falls in recent weeks after reporting less-than-stellar second quarter results, with Facebook shares falling 20% and Netflix down 13%.
Apple, which recently passed $1trn in value, reported good results but admitted it saw lower sales during the period. This meant it was having to increase the price of smartphones, such as the iPhone X, which retails at nearly $1,000, and rotate into other areas such as Apple Music.
Grieves added: "We do not hold the FAANGs because we want good cash-generative companies with a margin of safety whereas the share price of FAANGs will dip dramatically if there is any mis-step.
"People assume they will keep going up forever but if results indicate that is not the case then they will be hit."
While Grieves is averse to the five major FAANG companies, technology remains his largest sector weighting at 26%. However, this consists of companies such as payment processing firm Worldpay and software company Salesforce.com.
From a political perspective, Grieves feels US President Donald Trump's trade war threats are "unhelpful" for markets.
Trump has been vocal in his threats towards China as well as between the US and Europe, threatening to impose tariffs on imported vehicles. He has already imposed 25% steel and 10% aluminium tariffs on Canada, Mexico and the EU.
"There is a question mark over Trump, his tax cuts are a positive in the short term but his comments about trade wars are unhelpful.
"It will be a big unknown for the rest of the year, what impact will it have on a weakening Chinese economy? It could bring about a wobble in global stockmarkets by the end of the year," the manager said.
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