Kamco Invest: Thematic Investing and the Importance of Millennials in Shaping the Economic Landscape
Wiseman provided a brief overview of his team’s focus on thematic investing, including analyzing cyclical opportunities, their qualities and when to take advantage of them in the context of a portfolio that responds to the expectations of their customers. Needs. Their goal is to create diversified global equity portfolios that are multi-regional and multi-sector/industrial in nature with a particular focus on applying demographics in seeking out these opportunities.
Wiseman indicated that over the past nearly six years, they have seen a growing awareness by the investment community of the secular change currently being experienced, primarily driven by technology, providing a more attractive growth opportunity than a other areas of the market. The portfolios his team manages offer their investors insight and understanding of how they can take advantage of secular change, at the right price.
Wiseman noted that the driving force behind the secular change and cyclicality the market is currently experiencing is primarily a product of the growing importance of millennials in their participation in the global economy. They are the demographic force behind the revenues of certain businesses on a sustainable basis. Their millennial strategy revolves around the increasing wealth of this specific demographic group, as it is the largest generational segment in the world.
What makes millennials significant is that in numbers, they currently number around 2.3 billion people. Millennials are people born between 1983 and 2000, of whom 2 billion currently reside in developing countries. Generation Y was born at the start of the digital age and has seen its transition into our daily lives. Coupled with the fact that their projected incomes are growing at a rate three times faster than other generations, making them the most powerful consumer segment on the planet. The first key reason is spending on technology, as it has grown hand in hand with today’s relevant companies such as Google, Microsoft and Amazon, driving their growth and competitiveness as they use their services with increasing adoption of the value they offer. The second is that the data showed that as this segment grew and aged, their lifestyles also changed and evolved with different values and life priorities than other segments of the population. Many of these values and lifestyles also revolve around the environment, climate change and resource sustainability.
Millennials are now approaching their 40s, and with that aging comes additional influence in their respective societies. They are the main voting segment and are now beginning to shape the direction of change in the world in the future. The goal is to capture this influence in opportunities through their investment in companies that are or will continue to be part of this change.
AlOthman noted that technology is no longer part of a single sector as recognized by developed market indices. Rather, technology is the cornerstone for the evolution of virtually every sector and industry. Wiseman said it’s quite evident that portfolios that have focused solely on technology and growth-oriented opportunities have taken a big hit from the recent price pullbacks of these companies. A thematic portfolio allows an investor to be diversified across multiple areas of the market while remaining focused on a single central theme. This is the very essence of thematic investing.
Millennial spending is the biggest driver of future growth for some companies. Millennials tend to focus largely on lifestyle and technology, as noted earlier. This is and will remain central to their spending for many years to come. From these broader spending goals, investors can identify sub-themes that include opportunities in areas such as e-commerce, entertainment, fintech, and mobility (amusement rides and electric vehicles are examples). simple examples). Other areas include, but are not limited to, health and wellness, experiences, sustainable living, and childcare. Other more notable areas more identifiable recently are luxury. Wiseman and his team are looking for opportunities in companies that derive 50-70% of their income from millennials in the areas mentioned above.
Wiseman noted that when companies like Facebook changed their names to Meta, referencing the Metaverse, it’s clear these companies are focused on the power and strength of young people. Wiseman added that when looking to invest in the subthemes of the Metaverse, it’s important not to focus on investing in the Metaverse but rather around it. It is essential to invest in the hardware and software that surrounds the development of the metaverse.
AlOthman asked about the weakness that global equity markets are currently experiencing due to the sell off that occurred in the first month of 2022. Wiseman quickly replied that when it comes to their portfolio, the pressure has simply been on the prices of the companies they own and not their fundamentals. This creates an opportunity to reassess their existing positions to drive performance as value is released from the stocks they are invested in.
AlOthman inquired about the global commitment to infrastructure spending and how this fits into the millennial theme. More importantly, how is this being leveraged? Wiseman responded that the purchasing power of millennials will be a critical part of any infrastructure development.
Wiseman noted that regulation and regulatory changes have been a source of direction for many stock market themes, including evolving privacy laws that appear to be in line with millennial expectations. The other side is that it creates headwinds for companies that have to navigate these regulatory challenges. Fundamentals can change abruptly, as seen in China with the impact of regulatory enforcement on companies such as Alibaba and ride-sharing giant Didi.
AlOthman thanked Wiseman and Goldman Sachs Asset Management for their time and availability to share their thoughts on the subject via the webinar. Goldman Sachs as a business and the strategies it offers demonstrate the level of quality and sophistication that Kamco Invest demands from its clients. This is how Kamco Invest remains competitive across all of its products and services, regionally and globally, as it is consistently ranked among the best regionally through its products and consistently invests in the best managers and global strategies.
About Kamco Invest
Kamco Investment Company KSC (Public) “Kamco Invest” is a non-bank regional financial powerhouse headquartered in Kuwait with offices in major regional financial markets, established in 1998 and listed on Boursa Kuwait in 2003. It is acts as an independently managed subsidiary of the KIPCO Group. adopting the highest standards of corporate governance and regulated by the Capital Markets Authority and the Central Bank of Kuwait.
Kamco Invest has assets under management of over $14.6 billion as of December 31, 2021 across various asset classes and jurisdictions, making it one of the largest asset managers in the MENA region. It has acted as investment banker for transactions exceeding $29.2 billion from inception through December 31, 2021 across equity capital markets, debt capital markets, and mergers and acquisitions.
The views and opinions expressed are for informational purposes only and do not constitute a recommendation by GSAM to buy, sell or hold any security. Views and opinions are current as of the date of this presentation and may be subject to change, they should not be construed as investment advice.
© Press release 2022
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