Although volatility continues throughout world markets, it should be the time to focus on some major investment themes to be considered for investing:
- Emerging market consumption growth via investments in multinational consumer franchises. There are various multinational consumer franchises which have on average approximately 40% of their sales revenue from emerging markets. Some of these include: Yum! Brands, Danone, Nestle, Procter & Gamble and Unilever.
- A move to a cashless society. There continues to be a strong secular shift from spending via cash and cheque to cashless forms of payments such as credit cards, debit cards, electronic funds transfer and mobile payments. The explosion of smart mobile phones will accelerate this shift on a global basis and there are a limited number of companies that are well positioned to benefit from this structural shift. There are companies that are highly attractive with strong network effects, low capital intensity, high barriers to entry and high returns on capital, such as PayPal (via eBay), American Express, Visa and MasterCard.
- Internet/e-commerce. There are a number of internet enabled businesses that have very attractive investment characteristics with increasing competitive advantages such as eBay and Google.
- US housing. A recovery in new housing construction should drive a strong cyclical recovery in companies exposed to US housing and also provide a strong boost to the overall economy. Exposure to the US housing market can be made through home improvement retailers (i.e. Lowe’s and Home Depot) and domestic US (i.e. Wells Fargo and US Bancorp).
For information on how you can take advantages of these global investment themes, please contact your adviser at WLM.
Source: Magellan Asset Management