With an abundance of research, data and opinions at our fingertips in today’s fast-paced world, it’s easy to fall into the trap of always trying to locate the best tactics, strategies or securities to buy right now. At best, this is a patchwork system that is sure to fail. Without an overarching philosophy to bring it all together, one would just be chasing one investment fad to the next, losing money along the way.
At Thematics Asset Management, this is why we use a thematic lens to look at the world in our quest to generate sustainable excess returns over the long-term.
We have designed our thematic strategies around four major pillars which are defining our philosophy and style, hence our thematic DNA.
The first pillar is our emphasis on secular growth which is derived from four ‘Primary Forces’. Specifically, we consider Technology, Demographics, Globalization and Scarcity as the evergreen root causes of “tectonic” shifts shaping tomorrow’s world and affecting companies as well as the flow of money. They underpin the investment hypothesis for our thematic strategies.
The second is our focus:
Focused on few segments of the global equity market enjoying long-term secular growth underpinned by structural and long-lasting forces, the ins and outs of which we know very well. The persistency of this above-average growth is under-priced by the equity market. Our time horizon is therefore long-term by design, which shuts out the distraction of short-term ‘noise’.
Focused on thematic investable universes that are well-defined along value-chains and of reasonable sizes, which has enabled us to build a strong expertise and track record in our respective fields.
Focused on creating a concentrated yet diversified thematic portfolio of high conviction holdings through our dual role of fund manager and analyst. We look for compounders at a reasonable price, irrespective of any index inclusion and sectorial or geographic classification that are no longer in sync with today’s reality of companies’ portfolio of businesses.
Focused on responsible investing, which we believe is integral to creating value and reducing risks for our clients, as well as to promoting sustainable business practices beneficial to society in general.
The third consists in an unconstrained investment style. Our fundamental and bottom-up stock selection process is un-benchmarked, as we build a forward-looking portfolio whereas indexes favour the winners of the past. It also cuts across traditional classifications, be they geographical, sectoral or market capitalization considerations. As a result, our portfolio has a low overlap with, and a high active share versus global equity indexes, therefore adding diversification to an existing global equity exposure.
The fourth is about responsible investing. Beyond promoting sustainable business practices beneficial to society in general, we believe that the non-financial criteria we consider when making our investment decisions, particularly in relation to socially responsible management, are crucial in de-risking the portfolio and in delivering excess returns. Negative screening to exclude parts of the universe on ethical grounds, ESG scoring of companies and position sizing considering such scores to mitigate potential risks, in case they materialise, and fiduciary duties (proxy voting, engagement) are core to each step of our process.
Finally, the style employed is neither specifically growth nor value oriented but given our focus on adding value through the identification of companies with growth above that of the broader economy and stock market, and a refusal to overpay for this growth, we are comfortable to be considered as ‘GARP’ managers.
We invest for the long-term resulting in a low to moderate turnover.
Concentrated yet diversified portfolio of high conviction holdings.
We look for compounders to extract the “duration” risk premium that the market attaches to the persistency of high returns and cash-flows far out in time.
We believe in informed risk, managed with discipline and rigour.
Active management, conviction-based.
Unconstrained and benchmark agnostic.
Growth at a reasonable price, with a small & mid-cap tilt.
Fundamental and bottom-up stock selection.