It’s been five years since Capital Group launched its New Perspective strategy in a Luxembourg domiciled vehicle, giving investors in Europe and Asia access to a core global equity strategy with a successful 47-year track record of adding value across multiple market cycles and style driven environments. 

With more than US$9 billion¹ of assets under management in just five years, Capital Group New Perspective Fund (LUX) has successfully coupled rapid asset growth with strong investment results, having generated an annualised excess return of 3.3% above the MSCI ACWI since launch. ² 

A key focus of the fund is to invest in companies benefiting from changing relationships and shifts in the global economy. The 5-year milestone presents an opportunity to reflect on structural trends that have influenced the portfolio and consider what could lie ahead.

 

Some major trends shaping the global economy

How Capital Group New Perspective Fund (LUX) has reaped the benefits of change 

An advantage of the New Perspective strategy is its broad scope to capture change across sectors and geographies. Its focus on multinationals – both established and emerging – gives it flexibility, and diversity in its holdings.

Against a backdrop of change that has taken place over the past five years, how has the portfolio adapted?

The benefits of change:

Energy exposure has decreased, but exposure to utilities, particularly companies focused on renewable energy projects such as Orsted and Enel, has increased. Investments into companies positioned to benefit from the energy transition, like industrial gas producers, has also increased. Active investment decisions across energy and utilities have added 185 basis points in cumulative positive excess return over five years. 

Diversification in health care holdings has increased. An increase in the number of biotech holdings reflects the ‘basket approach’ our managers and analysts take to gain broad exposure to innovative, research-led companies. Aging demographics and consumer demand are fuelling growth for innovative drugs and treatments, increasing the number of investment opportunities available. 

Exposure to financials stocks has remained relatively consistent, however the composition has changed. The fund has moved into companies with innovative business models, such as financial exchanges, or those benefiting from exposure to growing wealth of emerging market economies, like Asia-based insurer AIA. Low relative exposure to banks, and a preference for more diversified financial companies, has contributed almost 500 bps in cumulative excess return over five years.

 

The value of consistency: 

Genuine long-term investors. Of our top 20 holdings at the end of September 2020, 18 were held at launch. The two exceptions are London Stock Exchange, where we initiated a position in February 2018, and Shopify which was first purchased in January 2020. An extended holding period allows managers to compound gains in successful companies. The cumulative impact of compounding over time is particularly powerful as it gives investors the opportunity to unlock the maximum potential value behind secular growth trends. 

Conviction investors. Four of the fund’s current top 10 holdings were also top 10 holdings in 2015. Amazon, Microsoft, TSMC and ASML have been conviction holdings in the fund over the past five years. The structural shift to cloud computing and proliferation in devices powered by semiconductor technology were two trends behind the long-term conviction positions in these tech leaders. Amazon Web Services and Microsoft Azure dominate the cloud, accounting for a 51% share of the market for cloud infrastructure service providers, ⁹ while TSMC and ASML have widened the technological gap with competitors in their highly specialised industry.

The information in relation to the index is provided for context and illustration only. The fund is an actively managed UCITS. It is not managed in reference to a benchmark. Past results are not a guarantee of future results.

1. Capital Group New Perspective Fund (LUX) assets under management as at 30 September 2020.

2. From 30 October 2015 to 31 October 2020, the fund has returned 11.4% p.a. compared with the MSCI All Country World Index (with net dividends reinvested) return of 8.1% p.a. Excess return is calculated arithmetically. Fund returns are in US dollar terms, after management fees and expenses for the Z share class, as a representative share class. Please visit capitalgroup.com for further details. Sources: Capital Group, MSCI

3. Source: eMarketer, May 2019. 16.1% is eMarketer’s forecast from May 2019.

4. Source: Gartner, July 2020

5. IEA, Global Energy Review 2020. April 2020

6. Bloomberg, 2019

7. Source: EvaluatePharma, June 2020

8. Source: Bloomberg. 6.5% for the period Q3 2020. 16.9% for calendar year 2006.

9. Source: Statista, August 2020.