He said the “market as a whole is expensive” but believes there are individual stocks that are good investments, and added that, given the size of the US market, owning no US-listed shares is not very feasible.
The Orbis Global Balanced fund has about 33 per cent of its capital deployed in US shares, making it the largest geographical exposure in his fund.
Because he runs a multi-asset fund, Mr Cutler invests in assets other than equities, so the 57 per cent allocation of a pure equity tracker fund is not a relevant comparator.
James Thomson, who runs the £1.8bn Rathbones Global Opportunities fund, which has returned 44 per cent over the past three years, compared with 27 per cent for the average fund in the IA Global sector in the same time period, currently has 65 per cent of the capital of his fund invested in the US market.
He told FTAdviser that: “there is no doubt the US market looks expensive compared to the level at which it has traded historically.
"But I would argue that the types of companies listed on the US market over recent decades has also changed.
"I think there are more quality companies there now, businesses that are less cyclical, less reliant on the wider economy to make profits, and the improved quality of the companies on the US market means it is justified that it trades on a higher valuation than it has done historically.
"In terms of valuations compared to other equity markets, I would say that the reality is the US is where the growth is right now.
"Company earnings in the US have been hindered by tariffs and the trade dispute, but I expect that as those effects wear off, the earnings growth of US companies will pick up, and that will boost the share prices further.”
Allocations
Simon Evan-Cook, multi-asset portfolio manager at Premier Miton Asset Management, has been sceptical of the investment case for US equities for quite some time, once describing his investment policy as “America last", due to concerns about what he believes are expensive share prices.
He says: “It’s no big secret that we have generally had very low exposure to US equities over the last decade.
"So the good track record we’ve built up over that time has been in spite of our views on US equities, not because of them.
"But (like a stopped clock) we think we’ll be right to avoid the US eventually.
"In all of that time, our chief reason for avoiding US equities has been that they looked too expensive compared to other markets, and that remains the case today.
