Gene Salerno

We have recently increased our allocations to US mid-caps, at the expense of reducing exposure to emerging markets and China in particular. Earlier in the year, we had added to emerging markets with a China bias on the basis that China equity was undervalued, unloved and likely to rally on eventual government stimulus measures. 

Put simply, that happened. It may be surprising to some, but to the middle of November at least, China equity had a similar year-to-date return as US equity (when viewed on a common currency) and has thus been one of the best performing markets.

Our bias to US mid-cap equities is the most pronounced call, currently. US equities, particularly those with a greater domestic relevance, have further to gain under a Republican government. It is reasonable to expect a potent combination of reduced taxes, reduced regulation and reinvigorated mergers and acquisitions. We are otherwise flying close to strategic allocations.

Succession, written by Jesse Armstrong