Generating returns from global change
The world is changing, faster than ever. For six years the Global Trends Managed Fund has delivered strong returns to investors through its investments in structural growth trends in the global economy. The Fund identifies major long-term changes in the global economy and allocates investor capital to invest in the enabling technologies and business models driving those trends. Only the highest growth trends are invested in and there is no overreliance on one sector. In the future, new technologies and new demand trends will continue changing the world. The Fund adapts to invest in new trends when they arise. Investors positioned to invest in future trends will reap great rewards. The Fund aims to invest in the highest growth trends currently changing the world and to adapt to invest in new trends when they arrive. The Fund has returned +57.26% since 2012, this is an annualized increase of +7.61%
In this anniversary newsletter, we look at the key benefits of this investing strategy and how the Global Trends Managed Fund is structured to take maximum advantage of the mega-trends that are changing the world.
Adapt to Win
By 2020 there will be 4 billion people and 50 billion devices connected to the internet, by 2030 there will be 200 million electric cars on the road and robotic automation will have replaced 800 million jobs, by 2050 an extra 1 billion people will be living in cities and global demand for water will have increased by 50%. These are examples of global trends. These dramatic changes, and many others like them, will drive unprecedented future demand for new technologies and services. These changes will eliminate older industries and redundant technologies. The change happening today to the global economy offers great rewards to investors with the right strategy, but also great peril to those investment strategies not focused on the long-term changes underway.
“Survival of the fittest” is a miss-quote of Charles Darwin’s work in his Theory of Evolution. A better reduction of his theory would be the “survival of the most adaptable”. Being the strongest or fittest is not what distinguishes the survival and success of a species in the natural world. What distinguishes a successful species is its ability to adapt to a changing environment. In the investing universe, an environment of rapid change, it is those investment strategies most able to adapt to change that survive. With the Global Trends Managed Fund, this idea is taken one step further. We embrace the change created by global trends, we aim to invest in those trends to the benefit of investors. Rather than just adapting to survive, we adapt to win and provide investors with investment exposure that earns returns driven by the major changes happening in the world today. The strategy is to invest in the companies that own the critical technologies and provide the critical services to facilitate global change.
The Fund sits at the heart of these global changes, investing across all major global structural changes. Change creates growth opportunities. As old industries and technologies become redundant, new ones are born and grow. For the Fund, this translates into an investment portfolio of companies with much higher levels of growth in revenue and profits than the world economy. The average revenue growth across the Fund’s portfolio of investments is +500% higher than the trailing level of global GDP growth. This much higher level of growth in revenue and profit in the portfolio is driven by exposure to global trends. Through investments in companies that own the critical technologies and services to facilitate global change, the investment portfolio is naturally oriented toward higher levels of growth. The mix of growth exposures, with investments across multiple global trends, also offers investors the safety of not being over exposed to a small basket of investments or trends. This offers investors a mix of high growth exposure with lower portfolio volatility, and on average better risk-adjusted returns.
The Fund’s ability to research future investment trends offers investors ‘future proofing’ of their investment strategy. As well as monitoring current investment opportunities, the research team also monitors which trends are likely to be ‘game changers’ in the future. These future trends, driven by the development of new technologies, demographic changes and emerging markets will change the world. Emerging sectors like driverless vehicles, nanotechnology, new energy sources, the space economy and lab-grown meat will be major drivers of change in the future world economy. These future global trends do not yet offer investment opportunities for public equity investors. The sectors are too young and technology still in the research phase in many cases, but nonetheless these future trends will happen and will offer considerable investment upside when the time comes. The Global Trends Managed Fund aims to adapt to these new global trends and is ready to invest as they mature. This adaptability ensures investors are not left with growth investment exposures which have matured and offer little upside. This strategy also ensures that investors in the Global Trends Managed Fund are always positioned at the forefront of the latest and most impactful global trends, offering the strongest exposure to growth.
Data in both graphs sourced from Bloomberg.
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