Cutting through the noise: The cost of living crisis
In this podcast series, Portfolio Manager, Jamie Ross, and Portfolio Analyst, David Barker, give investors an insight into the research, discussion, and analysis that shapes and influences their investment decisions.
1 minute watch
Key takeaways:
- With consumers spending less on non-essential items, the consumer discretionary sector has been one of the worst-hit. In contrast, consumer staples companies such as Nestle have been more resilient.
- The portfolio has no exposure to the automotive sector: auto manufacturers have benefitted from constrained supply and therefore strong pricing over the last 18 months. However, pricing could weaken as supply comes back into the market.
- Within industrials, stock selection has been key. We have been adding exposure to semiconductor equipment companies, including ASM and BE semiconductor as they stand to benefit from structural growth trends such as higher digitalization, the 5G upgrade cycle, and increased demand for more advanced chips.
Jamie and David talk about the cost-of-living crisis, its impact on companies within the consumer discretionary, consumer staples, autos, and industrials sectors and how it has impacted their investment decisions.
Related insights
These are the views of the author at the time of publication and may differ from the views of other individuals/teams at Janus Henderson Investors. References made to individual securities do not constitute a recommendation to buy, sell or hold any security, investment strategy or market sector, and should not be assumed to be profitable. Janus Henderson Investors, its affiliated advisor, or its employees, may have a position in the securities mentioned.
Past performance does not predict future returns. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested.
The information in this article does not qualify as an investment recommendation.
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Important information
Please read the following important information regarding funds related to this article.
- If a Company's portfolio is concentrated towards a particular country or geographical region, the investment carries greater risk than a portfolio that is diversified across more countries.
- The Company may have a particularly concentrated portfolio (low number of holdings) relative to its investment universe - an adverse event impacting only a small number of holdings can create significant volatility or losses for the Company.
- Where the Company invests in assets that are denominated in currencies other than the base currency, the currency exchange rate movements may cause the value of investments to fall as well as rise.
- This Company is suitable to be used as one component of several within a diversified investment portfolio. Investors should consider carefully the proportion of their portfolio invested in this Company.
- Active management techniques that have worked well in normal market conditions could prove ineffective or negative for performance at other times.
- The Company could lose money if a counterparty with which it trades becomes unwilling or unable to meet its obligations to the Company.
- Shares can lose value rapidly, and typically involve higher risks than bonds or money market instruments. The value of your investment may fall as a result.
- The return on your investment is directly related to the prevailing market price of the Company's shares, which will trade at a varying discount (or premium) relative to the value of the underlying assets of the Company. As a result, losses (or gains) may be higher or lower than those of the Company's assets.
- The Company may use gearing (borrowing to invest) as part of its investment strategy. If the Company utilises its ability to gear, the profits and losses incurred by the Company can be greater than those of a Company that does not use gearing.
Specific risks
1 minute watch
Key takeaways:
- With consumers spending less on non-essential items, the consumer discretionary sector has been one of the worst-hit. In contrast, consumer staples companies such as Nestle have been more resilient.
- The portfolio has no exposure to the automotive sector: auto manufacturers have benefitted from constrained supply and therefore strong pricing over the last 18 months. However, pricing could weaken as supply comes back into the market.
- Within industrials, stock selection has been key. We have been adding exposure to semiconductor equipment companies, including ASM and BE semiconductor as they stand to benefit from structural growth trends such as higher digitalization, the 5G upgrade cycle, and increased demand for more advanced chips.