Move with the current.
Get ready for new opportunities.
A seismic transformation is underway in financial markets, driven by the rise of AI, a fundamental rewiring of the global supply chain, and the low-carbon transition.
Change is happening, but its speed and impact are uncertain. Tapping into structural growth at the core, while being nimble to capture shorter-term opportunities is more important than ever.
To thrive, you’ll need to adapt. Discover two principles that will help position for what comes next.
Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.
1. Equities for growth
It sounds simple, but equities are the asset class for long-term growth. You can’t capitalise on the transformative potential of the world’s latest innovations without them.
A selective approach targeting exceptional companies with dominant market positions may be one way to take advantage of these strategic tailwinds.
Start with the opportunities found at the forefront of technological innovation such as AI and in the massive infrastructure investment needed to fuel its expansion. Then look to the beneficiaries of health care themes such as the growth of GLP-1 drugs.
A long-term approach that brings in quality companies that can grow their earnings over time might also include the resilient earnings and brand heritage available in some areas of the luxury goods sector. These high-quality growth stocks can sustain performance through market volatility – and help you build a quality core. And this approach can be enhanced by advanced systematic methods that analyse big data to identify potential opportunities.
2. Nimble cyclicality
Away from the core, agility is key. Adopting a nimble, tactical mindset and staying light on your toes can help you exploit shorter-term economic cycles and market conditions.
The goal: to move with the current and capitalise on less structured or long-lasting opportunities. Valuations are one place to start. Traditional energy companies don't appear to be priced for resilient long-term demand, whilst the strength of demand growth for renewable power also appears to be underestimated.
We believe copper has been a 2024 bright spot, with supply-chain investment lagging demand for this key transition metal. Should this deficit sustain, it may feed through into better margins for copper miners.
Our belief in European equities has strengthened recently, with earnings at a turning point after years of stagnation. Taking a selective approach to look for winners through active strategies will be key to success in an environment where macro uncertainty has been rising. Index strategies can be used to target specific sectors where earnings appear particularly undervalued, like European banks.
