Talking Tactics

2 sustainable themes to help you make an impact in your multi-asset portfolio

Discover two sustainable themes Simon Holmes, Portfolio Manager, is actively excited about from both an impact and investment perspective.
June 2021
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We increasingly want to play our part in creating a more sustainable world for our future generations, whether we recycle, eat less meat, or refrain from using single-use plastics. And by using active multi-asset strategies, we can also make an impact through our investments, that won’t cost the earth.

Simon Holmes, Director, Portfolio Manager, Multi-Asset Solutions, takes us through two sustainable themes he is actively excited about from both an impact and investment perspective.

Risk Disclaimer

The value of investments can go down as well as up and investors may not get back the original amount invested.

Views and opinions have been arrived at by BMO Global Asset Management and should not be considered to be a recommendation or solicitation to buy or sell any companies that may be mentioned.

Health & wellbeing

Now more than ever, we are acutely aware of our health and healthcare systems due to the impact from the Covid-19 virus, as well as our mental health from the impact of the lockdowns. The pandemic has changed the way global governments respond to health crises, which has created opportunities for those companies at the forefront of healthcare solutions and innovation. With the race to vaccinate the global population, AstraZeneca is now a pharmaceutical company that everyone has heard of. But they have been innovating in healthcare solutions far before the virus spread around the world.


Cancer care
New cancer cases set to double in high income countries and increase more than 80% in low income countries by 2030.


Due to a mix of higher life expectancy, lower birth rates in some parts of the world, and migration, the global population is ageing. Virtually ever country in the world is getting older as the proportion of the population that is 65 or older grows. An older population that is living longer will require better treatment for a number of growing ailments.

As a result, oncology has attracted substantial investment, and this is an area where AstraZeneca has focused its research and development (R&D). Targeting areas like lung cancer and pancreatic cancer, they are bringing new generation drugs to the market, leapfrogging competition. The growth is very secure due to the patents that confer protection – a significant component of the competitive advantage for AstraZeneca.


Nutrition
Global obesity has nearly tripled since 1975, and is responsible for 5% of all deaths.


Another longer-term healthcare theme is obesity. Changing lifestyles have led us to become more sedentary, and the rate of obesity has increased dramatically at an enormous economic and human cost. Worse yet, child obesity is also on the rise. Obesity is growing at an alarming rate in emerging markets; it is also the bane of developed nations, and one of the main causes of type 2 diabetes.

Nutrition is naturally the answer. Whilst over the very long term, industrialisation has made bad nutrition more accessible, the shorter-term trend has seen a strong reversal of these bad habits. Spurred on by regulation, consumer trends are changing, championed by younger, more environmentally and health conscious generations. The hunt for cleaner, healthier, more nutritious and natural foods has been accelerating for several years and we have seen the proliferation of new products on the market aimed at addressing these growing needs. Specialty ingredient companies like Ireland-based Kerry Group, provide solutions to some of the complex challenges faced by the food manufacturers. Consumers want products that are tasty yet nutritious, whilst regulators are mandating strict label transparency, and specialty ingredient companies make this possible by acting as R&D outsourcers and partners to the food manufacturers.

Technological innovation

Lockdowns have acted as a huge accelerant to pre-existing trends, particularly in the technology and digital spaces, condensing multi-year change into one short year. But with or without Covid, the general pace of change in this field is certainly accelerating and as investors, we want to support those technologies that are helping connect the world, protect the environment and digitally empower people.


Making sense of data
90% of the world’s data has been created in only the past two years.


The number of devices is increasing in the home as well as outside, in places like factories and hospitals. Already much of our lives are lived on wireless devices like mobile phones. In the not-so-distant future, machines, appliances, autonomous cars and even traffic lights could be connected and communicating with one another, generating enormous amounts of data.

The proliferation of data points is problematic to say the least. Data is useless without a framework to make sense of it. Enabling better, faster decisions by providing tools that quickly find targeted and actionable information is one of the ways RELX makes sense of the enormous amounts of data it wields on behalf of its clients. RELX will serve customers across the pharmaceutical industry for instance, where its tools enable faster approval times for drugs, or in the financial industry where their solutions help tackle fraud, identity theft, cybercrime and bribery, and help lenders lend more responsibly.


Empowering people, digitally
Humans are not the only data generators: machine-generated data accounted for an estimated 40% of internet data in 2020.


Wolters Kluwer is another software company that develops expert data solutions aimed at providing customers with the right information, packaged in the right way, at the right time, and at the point of maximum impact. Nowhere is that clearer than in their healthcare end-market, where their expert solution, UpToDate, puts the latest science and evidence into the hands of doctors to get the best outcomes. Their data solutions improve patient care, quality and outcomes.

The aforementioned data crunchers and solution providers are fully entrenched in their customers’ processes and their solutions deliver enormous value-add at a relatively low cost. In that sense, they are very hard to displace and customers are ‘sticky’, giving them a very stable and recurring revenue base from which to grow.

Get active to make an impact

These sustainable themes are an exciting way to make a positive impact on our world through our investments. It takes expertise and research to identify the companies that are innovating technologies and solutions to address the challenges presented by these themes. That is why we believe that an active approach is the best way to harness these opportunities. Sustainable multi-asset investing is a growing trend; the challenge is to find an investment that doesn’t cost the earth.

Simon Holmes

Director, Portfolio Manager, Multi Asset Solutions

LEARN MORE ABOUT THE AUTHOR

Risk Disclaimer

The value of investments can go down as well as up and investors may not get back the original amount invested.

Views and opinions have been arrived at by BMO Global Asset Management and should not be considered to be a recommendation or solicitation to buy or sell any companies that may be mentioned.

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