Hamish Chamberlayne, Head of Global Sustainable Equity and Portfolio Manager, sees good reason to remain optimistic in 2020 and beyond amid an economy that is nearing the end of its cycle by focusing on companies whose business models benefit the development of a sustainable global economy.

Key takeaways:

• In an environment that no longer caters for indiscriminate rising stock prices, Hamish still sees companies which are growing and innovating at a very compelling rate.
• Maintaining a keen focus on a low carbon approach and the fourth industrial revolution helps keep the team on the right side of social and environmental change.
• Technology now touches nearly every aspect of our lives and the team believe this is increasing the momentum towards a more sustainable economy.

Transcript

What opportunities do you see in 2020?

As we look into next year, we are still finding a lot of investment opportunities and a lot of ground for feeling optimistic about generating strong investment returns. I know we are late in the economic cycle, but there are still companies which are growing and innovating at a very compelling rate and I think, when we look at the world today, what we see is a two-speed economy. We don’t have the conditions of a rising tide lifting all boats.

Rather, we believe we are living through an era of incredible change and that is really defined by large environmental and social trends and issues. We believe that focusing on these big environmental and social trends is really going to help us make better investment decisions and it is also really characterised by, or aided by, technology. I think it is very true to say that technology is having an enormous impact on every aspect of our lives now. Not just in the way that we communicate, but in the way that we bank for financial services, in the way that we use our assets, in the way that we organise all aspects of our personal life.

We see a very close link between sustainability, growth and innovation. And in this two-speed economy, there are a collection of companies which are growing, innovating and there are some companies on the wrong side of these trends which are struggling to grow.

So, taking a step back and thinking about global equities and the outlook for global equities, when we look at the macroeconomic environment we often think that central bankers are really prisoners of the aggregate statistics. There are these companies which are growing and succeeding and generating wealth, and then there are these companies that are on the wrong side of some of these trends which are struggling to grow and which are declining. You put these two sets of companies together and you get low overall economic growth and central bankers are struggling to raise interest rates. But that is actually an incredibly favourable investing environment for companies which are growing and those are the companies that we are focusing on. And that’s the whole point about our framework. We believe that investing through a lens of sustainability helps us find better investment opportunities; it is going to help us find those companies which are growing.

Key themes: low carbon economy and the fourth industrial revolution

In terms of the key themes in our strategy, it is really a continuation of the ones that we have been focusing on for the last several years. There are two huge investment trends that we focus. One is the transition to a low carbon economy and we have always had a very low carbon approach to constructing our portfolio. We believe this really makes good investment sense to have a low carbon approach to investing. There is going to be a huge amount of change and disruption associated with this generational investment trend.

The other trend we focus on is the fourth industrial revolution: the increasing penetration of technology into all aspects of our economy. We actually think that looking at portfolio risk management through a sector lens is not particularly helpful these days. The reality is that technology is penetrating all aspects of our economies and when we look at our technology holdings we see many different types of risk, different types of companies. We see companies focusing on financial services, or we see healthcare technology, or we see manufacturing technology, or we see architecture and design technology.

So I think that is going to be a key theme as we go into next year is seeing these companies that are continuing to grow, continuing to innovate.

Focus on companies moulding a sustainable global economy

In summary we still see a lot of opportunities. Underpinning it all is this idea that the companies we are investing in are those which we think are producing goods and services that are of benefit to the development of a sustainable global economy. And fundamentally we believe that this just makes good investment sense to invest in these companies which are growing, which are compounding wealth and which are constructing the economy of the future.