L&G Investments responds to today's Q1 GDP figures from the US which recorded 2.5% growth:
"US GDP growth was disappointing in the last quarter of 2012. But today's data demonstrates a faster pace of growth. It shows that the world's largest economy is in a far stronger position than the majority of developed markets. Compared with yesterday's UK data, where Q1 GDP growth was a sickly 0.3%, the US is moving decisively towards a full economic recovery.
"The question for investors is how best to access the US opportunity. The US continues to be home to some of the world's best known and most dominant companies, with a corporate culture that has responded to the downturn by cutting costs aggressively, boosting profitability. This has prompted many people to see US equity markets as attractively valued.
"The size and extensive analyst coverage of US equities means it is an extremely efficient market, particularly for large caps. Equity valuations are generally accurate, and this leaves relatively little room for stock-pickers to identify undervalued shares. Given this, many investors have become disillusioned with paying high fees to an active fund manager when it is so difficult to consistently beat the US market, and are instead opting for a passive approach.
"Index funds that seek to track US market indices can give investors broad and diversified exposure to US companies, at a cheaper cost than many actively-managed funds."
From Dan Attwood, Proposition Manager, Retail Index Funds. The Legal & General US Index Trust provides broad exposure to US equities with an AMC of just 0.15% and is available now on a large range of intermediary platforms. The fund has also been awarded the S&P Capital IQ Platinum grading, demonstrating very highest standards of quality based on its investment process and risk awareness.
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