Global Thematics strategy - August 2021
The trends underpinning the Global Thematics continue to strengthen
- Global equity markets rose further during August
- The strategy performed well over the month
- Performance has been led by our ‘Clean Tech’ theme
Global equity markets rose further during August, and we have witnessed the continued outperformance of growth and quality relative to value which began during the latter part of May.
US macroeconomic data has remained strong with inflation data increasingly in focus. Whilst inflation has continued to pick up in the near term, the Federal Reserve has reiterated that inflation is likely to moderate and inflation expectations are “well anchored”. August payroll data was weaker than expected which should assist in this stance.
The European economy continues its path to normalisation and is posting strengthening macroeconomic data. Despite a pick-up in inflation, the ECB1 remains supportive. The outlook for growth in many Emerging Markets is mixed, with some areas suffering COVID disruption and others benefitted from the strength in demand for exports.
We retain conviction in the structural growth trends which support the five key themes within the Global Thematics.
Portfolio positioning and performance
The strategy performed well in August due to a positive contribution from all themes except Ageing & Lifestyle.
This was most notable in ‘Clean Tech’ where NextEra, a US renewable energy provider, Ceres Power, a UK based fuel cell business and European energy storage player, Alfen, all outperformed. Each reported strong quarterly earnings and outlooks which were well received by the market.
In ‘Automation’ , Trimble as a result of strong earnings, demonstrating strength across end markets and continued delivery of strategy.
‘Connected Consumer’ continued to deliver positive performance, notably from Globant, Alphabet and Salesforce.
In ‘Ageing & Lifestyle’, we saw weakness from a number of holdings including Amedysis which suffered on concerns over its ability to deliver its target admissions growth given high turnover amongst its hospice workforce.
We made no material changes to the portfolio during August.
Macroeconomic conditions are broadly supportive and the trends underpinning the Global Thematics continue to strengthen. Industrial activity and strong order books for industrial robotics companies highlight the positive outlook for Automation, the experience of the recent pandemic serve to underscore the importance of managing health within the context of an aging population. Consumer and corporate demand for Digitalisation and the Energy Transition continue to build.
We retain the view that high quality management teams, operating businesses with a sustainable competitive advantage in their markets and with the benefit of secular tailwinds are well placed to navigate the current disruption. The strategy is therefore well positioned to benefit from the secular shifts we are witnessing globally.
No assurance can be given that the Global Thematics Strategy will be successful. Investors can lose some or all of their capital invested. The Global Thematics strategy is subject to risks including Equity; Emerging markets; Currency; Global investments; Investments in small and/or micro capitalisation universe; ESG.