Henk Grootveld

Robeco

A rated

Put simply, the global trend of digitalisation started with the consumer in the US. The first smartphone – the iPhone – was launched there 11 years ago and this led to new products, services and platforms. Chinese companies have copied, improved and expanded the American ideas of ecommerce and social media, but the US still leads the way when it comes to developing new digital consumer products.

US companies, for example, are the market leaders in augmented reality, autonomous cars and quantified self-devices such as Fitbits. Nevertheless, there is no room for complacency in such highly-competitive markets. For instance, most digital production tools updating factories, warehouses and manufacturing hubs are coming from Japanese or continental European companies.

For this reason investors need to be selective. So what high-growth US industry should be part of every global growth portfolio? The gaming sector. This has changed from sell-through-retail to a direct consumer-linked industry operating on multiple platforms such as mobile, console and PC. In the past it was very much a one-hit-wonder oriented business and even today you still see the same titles in the gaming top 10, and their latest spin-offs. However, apart from selling games there are other revenue opportunities in areas such as esports tournaments.

This space is especially popular with millennials and the number of esports leagues is likely to increase and could become a medal event for the Olympics within the next 10 years. The recent announcement that the Premier League is launching an esports competition is just the beginning.

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Henk Grootveld

Robeco

A rated

Put simply, the global trend of digitalisation started with the consumer in the US. The first smartphone – the iPhone – was launched there 11 years ago and this led to new products, services and platforms. Chinese companies have copied, improved and expanded the American ideas of ecommerce and social media, but the US still leads the way when it comes to developing new digital consumer products.

US companies, for example, are the market leaders in augmented reality, autonomous cars and quantified self-devices such as Fitbits. Nevertheless, there is no room for complacency in such highly-competitive markets. For instance, most digital production tools updating factories, warehouses and manufacturing hubs are coming from Japanese or continental European companies.

For this reason investors need to be selective. So what high-growth US industry should be part of every global growth portfolio? The gaming sector. This has changed from sell-through-retail to a direct consumer-linked industry operating on multiple platforms such as mobile, console and PC. In the past it was very much a one-hit-wonder oriented business and even today you still see the same titles in the gaming top 10, and their latest spin-offs. However, apart from selling games there are other revenue opportunities in areas such as esports tournaments.

This space is especially popular with millennials and the number of esports leagues is likely to increase and could become a medal event for the Olympics within the next 10 years. The recent announcement that the Premier League is launching an esports competition is just the beginning.

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David Ross

La Financière de l'Echiquier

A rated

I am still very bullish on US stocks, and have stayed fully invested. The US economy is going from strength to strength and, in my opinion, any market dips, like the one we saw in early October, should be bought by investors. At 60%, my exposure to the US remains overweight.

We adjusted our allocation a couple of times recently. During the summer, our valuation models showed our long-time favourite technology sector names were becoming stretched, while more economically-sensitive stocks, such as oil company EOG Resources and heavy machinery manufacturers Caterpillar and Deere, were very attractive given our forecasts. So the fund’s exposure to technology was reduced by 10% as we boosted our  positions in cyclical names.

However, the October stock market plunge, combined with outperformance by those cyclical names, reversed our valuation models once again and we are now buying back technology stocks. Many of these have been our best performers this year, such as Amazon, Adobe, Salesforce and Mastercard, all of which are up at least 25% this year. These companies are leading the way in terms of big data and cloud computing, which should provide success for years to come.

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Frank Schwarz

Mainfirst

A rated

There is a lot of uncertainty in the market and subsequent volatility. However, our investment approach is based on long-term structural growth trends rather than shortterm market movements. Consequently, in our global equities strategy we invest in themes that will deliver growth for longer periods of time such as digitalisation and automation.

The companies driving these developments have potential for high growth, which we define as about 20% a year. Many of these innovations are driven by US firms, so about 40% of our portfolio is currently invested there. For example, digital advertising has huge growth potential and is likely to be a second big revenue driver for Amazon, next to its cloud computing business AWS. Similarly, digital advertising is likely to continue to power growth at Instagram, which is owned by Facebook.

Another area offering investment opportunities is the provision of greater computing power. Nvidia has already grown substantially through its data centre business and has just brought out a new generation of GPUs with Turing architecture that is six times as fast as the previous generation and can be used in gaming, data centres and visualisation industries.

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Terry Smith

Fundsmith

AAA rated

We follow a simple strategy: invest in a portfolio of 20 to 30 quality global companies, try not to overpay for their shares and then do nothing. Most of the companies we invest in happen to be listed in the US, but we don’t invest in them for this reason.

We are not playing the US equities sector because we are focused on quality companies, regardless of where they are listed. I am amazed by how many people seem to be obsessed with trying to predict global events and their impact on the market. How many commentators failed to predict Brexit or Trump and were also wrong about the market reaction when these events occurred?
Even if you could predict when and how world affairs were likely to develop, you would be unable to use this as a basis for investment decisions.

Rather like the companies I most admire, I waste little time trying to guess what will happen to factors I cannot forecast or control. I am also astonished by the apparent obsession with national stock markets. The S&P is not the same as the US economy – we own one S&P 500 company which has no business in the US.

We seek companies that can sustain a high return on operating capital employed, in cash. This rules out most businesses that do not sell directly to consumers or that make goods which are not consumed at short and regular intervals. We won’t waiver from this strategy and will not be influenced by views on markets, economies or politics.

These comments first appeared in Issue 23 of Citywire Switzerland.

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