Capital Ideas^TM

In many ways, life has changed beyond recognition over the past 50 years. From cultural and technological revolutions to significant shifts in geopolitics and global relations, someone from 1973 might marvel at many aspects of everyday life in 2023.

As with anything that has had success over a long period of time, a central question with the New Perspective strategy, which reaches its fiftieth anniversary this year, is how it has managed to stay relevant and deliver durable long-term outcomes against a constantly changing backdrop.

Over its 50 years, New Perspective has aimed to identify companies driving, shaping and benefitting from transformational shifts in the global economy.

Key to the strategy has been a focus on global champions, those multinational companies well placed to benefit from changing trade patterns while also large enough to withstand global fluctuations. A ‘multinational’ mindset has also proved an effective filter for company selection over the decades, as these businesses tend to gain extra insight and diversified revenue streams by extending beyond their home market. They also typically have high barriers to entry, innovative management, and are more financially stable.

A major contributor to New Perspective’s success has been identifying these businesses in the early stages of their development and investing in them for the long term. Among the strategy’s top 20 holdings at the end of March 2023, Nestlé, for example, was first added to the portfolio 35 years ago in 1988, at which point the Swiss food and drink company had a market capitalisation of around US$9 billion. Today, it has a value of around US$318 billion, a growth multiple of 35 times. Other top holdings include Microsoft (first bought in 1997 and held consecutively since), TSMC (since 1999), ASML (since 2000), Novo Nordisk (since 2003) and Tesla (since 2014), highlighting a proven track record of investing in global champions early.

An investable universe comprising a spectrum of current and potential future global champion companies can offer an attractive combination of structural growth and resilience. Investing across this spectrum has been key to delivering durable outcomes over many market cycles.

As we celebrate New Perspective’s 50th anniversary, it is natural to look back to see what lessons we can take from the past five decades of investing.

Consistency over such a long period has required flexibility and New Perspective has never been narrowly focused on single specific themes or sectors. This flexibility remains as important now as ever before, as we are seeing an ongoing migration from narrow to broad market leadership − after a handful of technology-related stocks have dominated for years, we expect a much wider range of companies, sectors and countries to drive returns from here.

Growth investing will continue to evolve and digital disruption will likely endure, but other sectors and areas of the global economy may also have room to shine in this environment.

Throughout five decades of constantly shifting tides, New Perspective’s focus on world-leading, and potentially future world-leading, companies has remained the bedrock of its investment philosophy. In this respect, at least, it is comforting that the more things change, the more they stay the same.