Kully Sumra, branch director at Charles Scwab UK, reveals why investors should be looking to the US

Over the last couple of weeks we have started to see more positive and encouraging signs from the Global markets.  We have witnessed markets rallying in two of the world’s leading economies, the UK and US, which then leads to investors asking the “million dollar question” of, are we in the beginning stages of a global recovery?

Many commentators believe that we are now on the road to recovery which presents numerous investment opportunities.  Whilst this is welcomed news to investors, an air of caution should remain as we expect there to be some bumps along the way. 

Over the last couple of weeks we have started to see positive signs from both sides of the Atlantic. This is encouraging news for investors but what is particularly interesting is that active UK retail investors believe the US will actually recover ahead of the UK.   From our recent survey of more than 1,400 GB-based retailer investors, 44 per cent believe that the US economy and markets will recover sooner than the UK.  However, only 17% of respondents actually invest in US stocks.  A lack of understanding is the main driver for not investing in the US, with 41 per cent of those who don’t invest in US stocks saying that they don’t know enough about the US market. 

According to our research it seems as if UK investors are missing out, as the US can provide a whole wealth of investment opportunities. For example, one can choose to invest directly in US companies which enables an investor to tap into many different sectors.  Those who invested in US stocks actually believed that the Information Technology (13 per cent) and Energy (9 per cent) sectors are attractive sectors, which is reinforced by our sector recommendations. 

We continue to believe that global reflationary policies, combined with improving economic prospects, will benefit the more cyclical technology, industrials and materials sectors.  In contrast, we believe the defensive-oriented consumer staples, telecommunication, and utilities sectors will underperform.

When considering the US market for your investment portfolio you don’t have to just invest in specific companies or sectors: you can choose from a variety of different types of investment. What you invest in will depend on your individual circumstances and investment objectives.

So, whilst we may not be out of the woods just yet, investors should start to plan for a recovery, including searching and evaluating opportunities in other markets such as the US. Doing so can form just one element of a diversified portfolio, which is particularly important at this time of market volatility.