Capital Ideas^TM

If we look back at equities over recent history, markets have tended to move in decadal mega cycles, where one major ‘theme’ has dominated market returns.

A large proportion of equity returns over the last 10 to15 years has come from beneficiaries of lower interest rates, leading to extremely narrow market leadership from a handful of asset-light, US-domiciled, mega-cap technology platforms.

Following events that began to unfold in 2022, however, we believe we are now in a different market cycle; one marked by structurally higher interest rates, more volatile inflation and elevated geopolitical tensions.

But while change is the norm in the global economy, what is particularly unique – and exciting for us as investors – about this current point in time is that there appears to be a confluence of several transformational and multi-generational shifts occurring simultaneously. We will cover three in this paper, looking at how we are identifying the long-term investment opportunities arising from them.

Looking forward, we expect these powerful forces to drive far broader market leadership and a much richer, more diverse set of investment opportunities over the next decade and beyond. That does not mean certain technology-focused stocks cannot continue to do well but they may be joined by companies in other sectors and regions, and exposed to different structural tailwinds.

In other words, we believe it could be a particularly fruitful period for bottom-up, diversified and global stock pickers. Against such a backdrop, it is important to find investment strategies that can flexibly navigate significant market shifts while keeping true to their objectives and philosophy.