Investment Conference: Taking smart chances

Zehrid Osmani of Martin Currie Global. Image: Scott Louden

The reaction to the troubles around Credit Suisse and Silicon Valley Bank has caused some market volatility recently. As longer-term investors, we have the advantage of being able to look beyond the short-term noise and seek out companies that operate in areas of the market that are exposed to multi-decade growth trends.

As the global economy evolves, certain areas will be benefit and exciting structural growth opportunities can offer great potential for investors. Let’s look at some of those opportunities and the companies we invest in to help bring this to life.

Electric transportation

Many readers will own an electric car, or are considering one. It’s clear that infrastructure development for electric vehicles – and high-speed railways – is creating a number of brand-new investment opportunities as the sector is being revolutionised in a relatively short period of time.

Even Ferrari, the Italian luxury sportscar manufacturer, is releasing hybrid engines, with the first fully electric model to be launched in 2025. The brand is strong with high demand for new models.

But there’s more this than investing in car manufacturing. We are also finding many opportunities to invest in electric vehicles that relate to semiconductors and simulation software.

Semiconductors are vital to this transition, with electric vehicles needing a far higher number than their internal combustion counterparts. Dutch firm ASML is the world’s leading manufacturer of lithographic systems, and the company’s technology is fundamental to the mass production of semiconductor chips.

US firm Ansys develops engineering simulation software solutions for product design and operation. Their software aids the design of lighter materials for car manufacturers to increase the range of electric vehicles.

Energy efficient infrastructure

Sizeable government initiatives are currently driving infrastructure development to help decarbonise economies.

A key element is the need for greener and more energy efficient buildings. This is driving a lot of change, particularly in the construction sector.

Producing cutting-edge design and engineering software, US-based Autodesk helps companies to innovate products that optimise resources, minimise energy usage and reduce the environmental impact.

We also invest in companies that benefit from the trend towards greener buildings and have leadership positions in manufacturing insulation materials. They may also benefit from any tighter energy efficiency regulations introduced.

Robotics AND automation

We predict rapid adoption of digital technologies and robotics as companies focus on making their supply chains more robust and production capacities more resilient. Innovative solutions include “smart factories”, automated warehouse monitoring, digitised logistics and remote maintenance.

Hexagon, a Swedish technology firm, is exposed to the Internet of Things, providing customers with smart solutions for interconnected factories, construction sites and cities.

Healthcare infrastructure

Following the pandemic, we predict an increase in healthcare spending and innovation, as governments seek to make their infrastructure more resilient.

We also expect personalised healthcare, digitalisation and outsourcing trends to accelerate.

US firm Illumina is making genetic sequencing more accessible and this opens up a wide range of applications, from tackling infant mortality and vaccine development, right through to agriculture and disease-resistant crops.

Cloud computing

An impressive online presence is vital for almost all companies and this is fuelling demand for cloud services and also the need to invest in cybersecurity.

For US tech titan Microsoft, cloud services are one of its fastest growing segments, not least with the firm’s Game Pass offering online access to PC and Xbox games.

Veeva offers cloud-based services specifically to the life sciences industry, bringing tailored software to areas such as drug development and brining products to market, importantly this allows greater connectivity between different parts of the complex healthcare market.

A selective approach

Our thematic framework highlights areas of long-term growth, but not every company operating in these areas of the market is worthy of investment.

At Martin Currie Global Portfolio Trust, we have adopted a highly selective approach that focuses on finding high-quality companies.

This means we also look for a range of tangible competitive advantages that include pricing power, competition and the barriers to entry as well as a robust set of financials.

We place a high value on environmental, social and governance (ESG) factors which, in our view, are equally important for a company’s long-term prosperity. In fact, we use over 50 different parameters to assess a firm’s ESG credentials which has earned us the highest “Five Globes” award from independent ratings agency Morningstar.

So, growth is out there – the challenge is identifying the companies that will succeed and deliver sustainable returns for investors.

Zehrid Osmani is portfolio manager at Martin Curie Global Portfolio Trust