Partner Content, Capital Group, sponsor of the Global Equities event, discusses the New Perspective strategy and portfolio for equity management.
Can you give a brief overview of your strategy in terms of what you are trying to achieve for investors, your investment process and the make-up of the investment team?
The New Perspective strategy, on which the Luxembourg fund is based1, is a core, flexible, global equity strategy that has stayed relevant for more than 50 years. It uses bottom-up research to identify companies that seek to drive and benefit from transformational change arising from changing global trade patterns and multi-generational secular shifts in the global economy.
A particular feature of New Perspective is its focus on multinational companies. Multinationals represent a cohort of companies that are particularly good at responding to change. They are typically well-equipped to deal with uncertainty and disruption, have strong and experienced management teams, and are capable of navigating different environments. New Perspective invests across the spectrum, from early-stage to established multinationals. This allows the portfolio exposure to the potential global champions of today and tomorrow.
A genuine, long-term investment horizon is an enduring focus of the New Perspective strategy. It is not positioned to time or capture ‘inflection points,' or market movements in the coming months and quarters. Instead, we invest in long-term leaders that are looking to drive, shape and benefit from transformational changes in the global economy. Looking beyond short-term noise, market volatility and maintaining a truly long-term perspective is critical at times when the outlook continues to be uncertain.
With a track record of more than 50 years, New Perspective has demonstrably navigated a variety of market environments and economic cycles.
How are you currently positioning your portfolio?
While the New Perspective portfolio is constructed from the bottom-up on a stock-by-stock basis, a top-down view shows exposure to several key, multi-decade trends:
Continued digital disruption: The last decade of digital disruption was powered by cloud computing, SaaS (software-as-a-service) and internet platforms. We still expect strong growth in these areas over the next decade, but we believe the next lift could come from the mass adoption and commercialisation of artificial intelligence (AI).
Health care innovation: We are in a golden era of health care innovation with companies developing new drugs and platform technologies to combat large and underserved markets such as obesity and cancer. New Perspective is invested across a broad range of companies, market caps and sub-sectors within health care, with a preference for companies with proven franchises, strong pipelines and/or no significant patent cliffs.
Energy transition: The global decarbonisation effort is expected to provide multi-decade tailwinds for companies trying to enable, solve or support the energy transition. We are finding investment opportunities across industries including raw materials, electric vehicles (EVs), energy storage, electrification equipment, air conditioning providers and alternative fuels (e.g. hydrogen).
Evolving globalisation: Elevated geopolitical tensions and supply chain disruptions have caused many to reconsider the notion of efficiency over resiliency. New Perspective seeks to benefit from changes in globalisation and ‘nearshoring' is providing interesting growth opportunities for companies in industries such as logistics, infrastructure machinery and medical equipment.
Can you identify a couple of key investment opportunities for your fund you are exploring at the moment in the portfolio? This could be at a stock, sector or thematic level.
The next major leap in the digital disruption era could potentially emerge from the mass adoption and commercialisation of AI.
As investors, one of the most attractive features of AI is that its ultimate addressable market is potentially limitless given its pervasiveness across so many parts of the economy. However, it remains crucial to separate short-term hype from longer-term investment opportunity.
We expect the AI opportunity set to evolve profoundly over the next decade, based on experience with previous paradigms. For example, in the early years of smartphones, few could have predicted that mobile applications such as Uber or Airbnb would emerge to become everyday services. With AI, our current imagination of what new applications may be possible is based on our limited understanding of this nascent technology.
Of course, there are hundreds, if not thousands, of start-ups that are trying to build the next potentially game-changing product, but it's very difficult to accurately predict which of these could eventually succeed. Instead, our focus is on incumbent companies that are integrating AI features successfully into their existing suite of applications, as this is where we believe more value is likely to be captured in the near-term.
Find out more from Capital Group New Perspective Fund (LUX)
1. Capital Group New Perspective Fund (LUX) [inception October 2015] is part of the Capital Group New Perspective strategy, which was launched in March 1973. It is managed by the same experienced investment team.
All data as at 31 March 2024 and attributed to Capital Group unless stated otherwise.
