Follow the young to find future returns, urges joint research paper
Understanding younger consumers – aged 19-35 – may be one of the keys to identifying the investments that will produce the best returns in future, according to findings of a White Paper, produced jointly by Gamax Management, Mediolanum Asset Management and DJE Kapital.
The paper’s authors say that investors should focus on businesses with strong brands that are gaining market share. Because younger consumers are trend setters, they can act as leading indicators of the future success of a business, especially in fast growing emerging markets.
Following the trends in young consumer behaviour can therefor offer predictability in terms of companies’ future earnings and cash flow.
The Paper’s other two key findings are around the need to identify equities on a global basis, and looking to judge the predictability of future earnings growth.
The Paper’s authors say that because of the ongoing demographic changes worldwide, investors should move away from thinking about geographies or sectors. Instead they should consider which companies are establishing leading positions in a product area, service or market.
Similarly, capitalisation weighted benchmark indices that are region or sector focused are losing their relevance, the Paper argues.
Instead, in a world where young consumers are becoming ever more brand conscious, investors should be looking to apply unconstrained bottom up stock selection.
Click here to fead the full research document: http://www.gamax.de/fileadmin/user_upload/Bilder/Agentur_22/GAMAX_JUNIOR_WhitePaper_ScreenView_Final.pdf