The in-house research capabilities of AXA IM Framlington Equities, part of AXA group, have evolved following the incorporation of a long-term thematic approach.
It includes the five main themes that the firm believes represent the future for long term fundamental growth investing:
• Ageing and Lifestyle led by Dani Saurymper focusing on the consequences and opportunities of extended life expectancy;
• Connected Consumer led by Jeremy Gleeson covering the e-commerce value chain and digital transformation;
• Automation led by Tom Riley encompassing applications of robotics and automation across a variety of industries;
• CleanTech led by Amanda O’Toole covering low-carbon economy solutions and sustainable resources management;
• Transitioning Societies led by Anne Tolmunen focusing on the economic inclusion and changing consumption patterns both in developed and, in particular, emerging markets.
It is the firm’s conviction that these five areas, considered as the Evolving Economy, represent multi-decade growth themes with greater than 10% year-on-year growth potential, as well as sufficient geographical, sector and market cap diversification.
Framlington Equities has already launched thematic funds related to the evolving economy such as the Robotech strategy in 2015 and the Digital Economy strategy launched in 2017.
Mark Beveridge, global head of Framlington Equities at AXA IM, said: “Equity investment is changing. While globalisation has made geographical listing less relevant for investors, sector definitions have also not evolved over time; the reality is that markets and companies have. Companies are increasingly multi-sector businesses and traditional sector definitions do not apply any longer. For example how do you classify companies like Amazon; is it a cloud company, logistics firm, e-commerce or an organic food retailer?
“Knowing companies, meeting their management teams and being a long term active manager is essential in identifying companies that are exposed to these growth themes. Passive investing relies too heavily on companies which fall neatly under sector definitions, meaning investors risk missing out on the more nuanced growth opportunities these themes can deliver.
“We are convinced that the themes we have identified will accelerate over the next decade and believe investors have to adapt. In recognition we have adapted our internal research capabilities by identifying five main long term growth thematics within the ‘Evolving Economy’.”
Mark Hargraves, head of Global Strategies at Framlington Equities, commented: “The investable universe was already well covered by our regional and sector fund managers at Framlington Equities with a significant presence of small and mid-cap opportunities, an area where historically we have added value to our clients. This is not new for us, just a proactive, more structured way of identifying the growth opportunities prevalent in the Evolving Economy to clients.
“Ultimately by adapting our internal research focus this enables us to optimise research activities to fully capture the investment implications of these five thematics that are influencing the global economy. This provides an additional way to identify true growth companies with pricing power and competitive advantage, without being constrained by the traditional barriers of sectors. Many companies are no longer respectful of these sectors and are changing, so are we.”