The US remains the deepest, best-performing major stock market. It also has the best governance. With over 4,500 stocks listed on the main exchanges, it offers the widest selection of companies to choose from and a cultural background that gives the best long-term returns.
At De Lisle Partners we took the decision to focus on small and mid cap companies. We also favour value and cheap growth. Our philosophy aligns with Nobel economics laureate Eugene Fama and his research partner Kenneth French. Their work, based on 100 years of US stock market data, proved that small size and value factors give the best long-term returns. Later researchers, such as James O’Shaughnessy, have confirmed their findings.
We like to invest in companies that are cohesive and inclusive, and we lean towards those that contribute to – and even create – a cooperative society around them. We also want to see they are making strides to reduce their emissions and become more environmentally sustainable.
When we invest we consider returns, risk and liquidity. Valuation is a key consideration for us, as attractive valuations alongside strong fundamentals have proved to exhibit lower risk over the long term. In terms of liquidity, the US equity market is the place to go.
Over the past 20 years, these beliefs have served us as well in practice as they have been expected to do in theory.
