Kickstarting a new panel, Ravenscroft Investment Management's head of fund research, Samantha Dovey, gives her view on some of the mjaor global trends right now.
'When introducing people to our investment philosophy, it often seems easier to start with what we don’t do: try to predict the future.
At Ravenscroft Investment Management, we have accepted the limitation that mankind simply cannot predict future outcomes with any sort or reliability or repeatability. We therefore do not position clients’ portfolios based on the unknown outcomes of political, social or economic events.
Instead, we believe the best way to build our clients’ wealth is to invest in long-term, irrefutable themes that will benefit from changes in demography, increasing global wealth and technological developments.
We also keep our investments simple, choosing not to invest in complex or opaque strategies such as hedge funds or structured products. As we all well know, investments can go down as well as up and the path will certainly not always be a smooth one, however investing into themes such as global brands, the emerging consumer, technology and healthcare is, as we perceive it, akin to cycling with the wind behind you.
These themes are not passing trends or fads, but huge structural changes that are supported by overwhelming evidence.
Let us consider changing demographics as an example: across the globe, particularly in emerging economies, vast numbers of people are moving from rural areas to cities in a phenomenon known as urbanisation. This mass exodus from the countryside has been partly facilitated by improvements in technology, which have significantly reduced labour demands in rural industries, such as farming.
By 2050, up to 66% of the world’s population could live in urban environments, compared to 54% today.
What this mobile, urban consumer creates is a demand for small ticket, disposable items – from toothpaste and washing tablets to snacks and pet food. The global brands that produce these items, for example the Unilever brands PG Tips, Persil and Flora, can make for great investments as they boast incredible pricing power and consumer loyalty.
Another phenomenon of demographic change is our ageing global population. As well as there being more of us, we are also living longer; largely due to a combination of medical advances and the fact that, overall, many of us enjoy a better quality of life than at any point in the past.
This huge increase in the 65+ demographic creates another huge demand – from prescription drugs, to care homes, from walking sticks to provision of healthcare in lesser developed countries including continents such as Africa and Latin America.
This trend creates an exciting investment opportunity and is set to continue regardless of who is leading any particular country and what their actions might be.
The theory is, certainly in our view, pretty logical. The question then is: does it work in practice to invest in irrefutable trends and the themes that they inspire?
The chart (below) reflects the performance of the MSCI World index versus our global investment themes. It seems apparent that, over the long term, our investment themes have added value.'
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