Kurt Feuerman on US shares, on leaving Caxton and AllianceBernstein’s ping pong policy
Veteran hedge fund investor Kurt Feuerman says institutional investors may be running a lower total exposure to US shares than they realise, partly as a result of their increasing appetite for risk-controlled ways to access the asset class, such as via hedge funds.
Feuerman, who joined AllianceBernstein from 28-year old hedge fund Caxton Associates in June 2011, adds US pensions may now have reversed their 60/40 allocation to equities/bonds of 20 years ago. And if part of the equities exposure is via flexible hedge funds – to achieve ‘non-correlation’ – then their final net exposure to shares may be even lower.
Now senior vice president and portfolio manager for US equities at AllianceBernstein, he says institutions may not realise just how low their final exposure to US shares has become.
Either way, the resulting allocation to US shares is not justified by the status quo of corporate America, nor by its prospects, he says.
He notes equities hedge funds made money in three years since 2009, whereas US shares rose each year. He says: “The US stock market is up four years in a row, but still people feel beaten up, and feel they will not own stocks.”
Since 2009 US shares have risen each year, including over 9% this year, and Feuerman sees more reasons to feel cheerful at the helm of the Alliance Bernstein Select US Equity Portfolio and AllianceBernstein – Select Absolute Alpha Portfolio.
“Earnings have hit a new high and companies are growing their dividends, which have also hit a new high, and they are growing faster than earnings because balance sheets have so much money on them. We are talking about double digit dividend increases for many large cap companies,” he says, singling our Exxon Mobil that grew its distribution 22% this year alone.
“Also, interest rates are low and balance sheets are clean.”