Revealed: The biggest driver of the new 'nifty fifty'

EQUITIES

Despite central bank money printing and near zero interest rates, capital remains difficult to access for most companies. This is, however, not true for all companies. For a small number - call them ‘uncommon stocks' - capital has never been cheaper or more widely available. This contrast between companies which have access to capital and those which do not is perhaps the single most important theme of this new economic and stock market cycle.

Investing in those companies with a competitive advantage, i.e. having access to capital, is likely to be rewarded by superior earnings momentum. After all, in a low growth environment the ‘uncommon’ stock can still achieve healthy profit growth through eating a competitor’s lunch. The ‘uncommon’ stock will also command an increasing premium relative to the rest of the stock market as superior growth and lower risk are recognised as being complementary, rather than opposing factors, as in previous cycles. So what constitutes an ‘uncommon’ stock? Take German car giant Volkswagen as an ...