Global equities: ‘predictable’ long-term trends key to sustainable growth

22/11/2017

Download

​Ian Warmerdam, Head of the Edinburgh-based Global Equities Team, believes that in 2018 and beyond investors should focus on the more predictable long-term trends that are shaping equity markets.

What lesson have you learned from 2017?

2017 has been another year when we were reminded just how challenging it can be to predict macroeconomic and political events. Whether it was the early year enthusiasm for what a Trump presidency could mean for US corporate tax, healthcare reform and infrastructure spend; the path of interest rates around the world, or the ever-evolving political landscape, meant predicting these changes and the impact they would have on financial markets was as tough as ever.

What are the key themes likely to shape the markets in which you invest in 2018?

We continue to focus our analysis on high-quality innovative companies from around the world that are well placed to benefit from what we believe are the more predictable societal and demographic trends shaping markets.

A number of long-term structural growth trends that we believe are underappreciated by the market continue to shape our strategy. These include the ongoing shift from cash to paperless payments; the transformational effect of the internet; the ageing global demographic and the consequences this is likely to have for healthcare spend and innovation; the quest for greater energy efficiency across a wide range of industries; and the continued growth of the emerging market consumer. We think that these will continue in a much more predictable fashion, proving attractive and growing end markets for companies that can build long-term competitive advantages.

Where do you currently see the risks within your asset class and where are the most compelling opportunities?

Trying to predict geopolitical and economic newsflow and the short-term impact this could have on markets continues to be a key risk, which is why we approach investing with a long-term mindset. Our investment decisions are made with a five-year time horizon and we see the risk of losing money as more relevant than relative underpeformance.

Many of the companies we analyse and invest in are beneficiaries of the previously mentioned long-term sustainable trends. We choose to focus on these rather than the much less predictable factors that can influence markets.

Our strategy will continue to invest in companies that have high-quality characteristics in terms of their franchise, financials and their management. We believe that this will provide resilience during periods of market uncertainty, allowing us to invest for the long term as these trends take hold.

As we look to invest in these companies we will continue to adopt a strong valuation discipline, always conscious that to generate long-term absolute returns we need to be investing in companies at an attractive price. With the continual move up in overall market levels, particularly in the US, we are acutely aware of the need to stay true to this discipline. 2018 will be a year when this will be as important as ever.

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. Any securities, funds, sectors and indices mentioned within this article do not constitute or form part of any offer or solicitation to buy or sell them.

Past performance is not a guide to future performance. 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.

For promotional purposes.


Important information

Please read the following important information regarding funds related to this article.

Janus Henderson Global Equity Fund

The Janus Henderson Fund (the ""Fund"") is a Luxembourg SICAV incorporated on 26 September 2000, managed by Henderson Management S.A. Any investment application will be made solely on the basis of the information contained in the Fund’s prospectus (including all relevant covering documents), which will contain investment restrictions. This document is intended as a summary only and potential investors must read the Fund’s prospectus and key investor information document before investing. A copy of the Fund’s prospectus and key investor information document can be obtained from Henderson Global Investors Limited in its capacity as Investment Manager and Distributor.

Janus Henderson Investors is the name under which investment products and services are provided by Janus Capital International Limited (reg no. 3594615), Henderson Global Investors Limited (reg. no. 906355), Henderson Investment Funds Limited (reg. no. 2678531), AlphaGen Capital Limited (reg. no. 962757), Henderson Equity Partners Limited (reg. no.2606646), (each registered in England and Wales at 201 Bishopsgate, London EC2M 3AE and regulated by the Financial Conduct Authority) and Henderson Management S.A. (reg no. B22848 at 2 Rue de Bitbourg, L-1273, Luxembourg and regulated by the Commission de Surveillance du Secteur Financier).

Nothing in this document is intended to or should be construed as advice. This document is not a recommendation to sell or purchase any investment. It does not form part of any contract for the sale or purchase of any investment.

Past performance is not a guide to future performance. The performance data does not take into account the commissions and costs incurred on the issue and redemption of units. 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. Tax assumptions and reliefs depend upon an investor’s particular circumstances and may change if those circumstances or the law change. If you invest through a third party provider you are advised to consult them directly as charges, performance and terms and conditions may differ materially.

The Fund is a recognised collective investment scheme for the purpose of promotion into the United Kingdom. Potential investors in the United Kingdom are advised that all, or most, of the protections afforded by the United Kingdom regulatory system will not apply to an investment in the Fund and that compensation will not be available under the United Kingdom Financial Services Compensation Scheme.

Copies of the Fund’s prospectus and key investor information document are available in English, French, German, and Italian. Articles of incorporation, annual and semi-annual reports are available in English. Key Investor document is also available in Spanish. All of these documents can be obtained free of cost from the Fund’s registered office in Luxembourg: 2 Rue de Bitbourg, L-1273 Luxembourg”, in Germany: Janus Henderson Investors, Tower 185, Friedrich-Ebert-Anlage 35-37, 60327 Frankfurt am Main, in Austria: Bank Austria Creditanstalt AG, Am Hof 2, 1010 Wien, in Spain: offices of the Spanish distributors, a list of which may be obtained at www.cnmv.es (Janus Henderson Fund is registered with the CNMV under number 259); in Belgium: Belgian Financial Service Provider CACEIS Belgium S.A., Avenue du Port 86 C b320, B-1000 Brussels; in Singapore: Singapore Representative Janus Henderson Investors (Singapore) Limited, 138 Market Street #34-03/04 CapitaGreen, Singapore 048946; and in Switzerland from the Swiss representative: BNP Paribas Securities Services, Paris, succursale de Zurich, Selnaustrasse 16, CH-8002 Zurich who are also the Swiss Paying Agent.

Please note that Isle of Man investors will not be protected by statutory compensation arrangements in respect of the Janus Henderson Fund. We may record telephone calls for our mutual protection, to improve customer service and for regulatory record keeping purposes.

Information on this document is on Henderson's best endeavours.

Specific risks

  • 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.
  • This fund is designed to be used only as one component in several in a diversified investment portfolio. Investors should consider carefully the proportion of their portfolio invested into this fund.
  • The Fund may have a particularly concentrated portfolio (low number of holdings) relative to its investment universe and an adverse event impacting only a small number of holdings can create significant volatility or losses for the Fund.
  • The Fund could lose money if a counterparty with which it trades becomes unwilling or unable to meet its obligations to the Fund.
  • Changes in currency exchange rates may cause the value of your investment and any income from it to rise or fall.
  • If the Fund or a specific share class of the Fund seeks to reduce risks (such as exchange rate movements), the measures designed to do so may be ineffective, unavailable or detrimental.
  • Any security could become hard to value or to sell at a desired time and price, increasing the risk of investment losses.

Risk rating

Share

Important message