Global Equities: Markets and Opportunities

R. Scott Berg, Portfolio Manager, Global Growth Equity Strategy

What industries are you excited for over the next 10 years?

Scott Berg:   

The world’s a big place, right, and there’s a lot of opportunity out there.  And one of the ways we run the portfolio is by design relatively sector neutral.  But within being sector neutral we take very big industry bets, and in industries are really subsectors.  And I’d say across the whole portfolio within pretty much every sector there are industries we see that are really advantaged versus others.

If I take the example of consumer discretionary as a sector, we see the whole e-commerce trend and industry as just taking meaningful share over a very prolonged period of time.  And so that might be Amazon in the US, it might be Alibaba in China, it might be Ocado in grocery, it might be Mercado Libre in Latin America, many different ways we play that.

In something like technology, software and the cloud and SAS business models are just clearly scaling up and taking meaningful market share within tech.  And so we have a tilt away from hardware toward those.  And then if I use a final example, I’d say in healthcare, where I think that for all the talk of drug pricing, and looking at pharmaceutical companies, and biotech companies, actually the part of healthcare where we’re finding most opportunity is med-tech companies.

What areas of emerging markets do you favour?

Scott Berg:

When I think of emerging markets, I actually really dislike the term ‘emerging markets’ as a single label, because I really think about emerging in four very different buckets.

China is a country in and of itself that’s just so big and important that it’s its own category, a little bit like the US is in the rest of the world.  Then you have the export oriented economies of emerging, particularly north Asia, so think Korea and Taiwan, which for all intents and purposes are developed world economies doing the back end of the tech chain, but because of corporate governance issues in Korea, or the fact that they’re not recognised formally as a country by the United Nations, Taiwan and Korea happen to end up in emerging.

The third bucket is commodity levered economies.  Think Russia, Middle East, South Africa, Brazil.  And they’re economies which really the commodity cycle and energy prices drive a lot.  And then the fourth bucket, which is really the bit I focus on, and am most interested in, is the demographically driven bit, where you have countries with lots of people who are very poor, who are working very hard to make a better life.  Also happens to be the countries that tend to have the lowest debt levels in a world which is pretty levered, the highest interest rates in a world of no interest rates, and normal inflation in a world of no inflation.

And for me, if I had to name five countries in the world that I’m most excited about in emerging that would typify what I’m looking for, it would be India, Indonesia, Philippines, Vietnam and Peru.


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