THE North American Income Trust’s chairman has declared achievement of a four per cent target for annual US growth set out by President Donald Trump’s administration “seems unlikely in the medium term”.

James Ferguson offered this view as the trust, which had shareholders’ funds of £373 million at July 31 and is managed by Aberdeen Standard Investments, yesterday reported a 0.6 per cent total return on net asset value in sterling terms for the six months to July 31.

This was just ahead of a total return of 0.5 per cent on the Russell 1000 Value index. But it was well adrift of a 4.5 per cent return on the S&P 500 index.

The North American Income Trust declared a second quarterly dividend of 7.5p per share. It noted this brought total dividends for the first half of the financial year to 15p-a-share, up by 7.1 per cent on the 14p payout for the previous first half.

Mr Ferguson noted US growth accelerated sharply in the three months to June. The world's largest economy grew at an annualised pace of three per cent in the second quarter.

But Mr Ferguson said: “Achievement of the four per cent growth target of the Trump administration seems unlikely in the medium term, particularly given the continued political stalemate, which reduces the likelihood of policy initiatives being implemented.”

He observed US equity valuations remained above long-term averages but noted cash-generative companies were becoming more attractive, and flagged the manager’s view that the trust was well-positioned for the future.

He said: “Our manager…at present believes that corporate fundamentals continue to improve steadily. Valuations remain above long-term averages - this is supported by the continued environment of low interest rates. Companies will need to show an acceleration in earnings and cash-flow growth for share prices to appreciate further.”

Mr Ferguson added: “There has been a wide divergence in returns between various investment styles and sectors, with high-growth companies in technology and healthcare having outperformed materially over the past year.

“Many cash-generative companies which pay dividends have been out of favour but this sector of the market is becoming more attractive because the risk of higher interest rates has been discounted. We therefore believe that this sector is attracting more interest, and our manager feels we are well-positioned for the future.”