Capital IdeasTM
Investment insights from Capital Group
Global Equities
Steven Smith
John Lamb
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.
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Past results are not predictive of results in future periods. It is not possible to invest directly in an index, which is unmanaged. The value of investments and income from them can go down as well as up and you may lose some or all of your initial investment. This information is not intended to provide investment, tax or other advice, or to be a solicitation to buy or sell any securities.
Statements attributed to an individual represent the opinions of that individual as of the date published and do not necessarily reflect the opinions of Capital Group or its affiliates. All information is as at the date indicated unless otherwise stated. Some information may have been obtained from third parties, and as such the reliability of that information is not guaranteed.
Capital Group manages equity assets through three investment groups. These groups make investment and proxy voting decisions independently. Fixed income investment professionals provide fixed income research and investment management across the Capital organization; however, for securities with equity characteristics, they act solely on behalf of one of the three equity investment groups.