Top Fund Managers Cautiously Optimistic on 2017

Notwithstanding the market’s strong run in 2016, many money managers feel uncertain as to the impact of the Trump administration both domestically and globally, according to several Morningstar Medalist managers. Here are highlights of their thoughts:

  • Brian Berghuis, manager of T. Rowe Price Mid-Cap Growth, anticipates some volatility related to the president elect’s “hard-line agenda,” saying that if Trump follows through on his plans, “a great deal of uncertainty will be injected into the businesses of some of our holdings.”
  • Charles Dreifus, manager of Royce Special Equity, foresees U.S. small-cap companies as poised to “gain the most from a lower tax rate, a rising dollar, and unstable economic conditions outside the U.S.”
  • Michael Clarfeld, co-manager of ClearBridge Dividend Strategy, believes that the potential for implementation of Trump’s pro-growth policies could “hasten a more aggressive program of rate increases” by the Fed. While this could put pressure on dividend-paying equities, Clarfeld argues that “quality companies that consistently grow their dividends are ultimately well-positioned for such a scenario.”
  • Peter Langerman, president and CEO of Franklin Mutual Series, says that current uncertainty regarding the “path of interest rate hikes by the Federal Reserve are among a collection of factors with the potential to produce short-term volatility and longer-term impacts on sector and company fundamentals.”
  • Marc Nabi, Investment specialist at Capital Group, asserts, “Recent political changes paired with muted economic growth across much of the world leaves many economies vulnerable to shocks.”
  • Matthew Benkendorf, CIO of Vontobel Asset Management, believes consumer stocks are “fantastic businesses that are  durable in any economic cycle.”  He admits that tax reform, decreased regulation and increased infrastructure spending are “all good things” but don’t come without risk.