Boucher said that today we are at the lowest interest rates ever. “And what’s so important of the recent period of 40 years is that we’ve gone from the highest interest rates to the lowest,” he said.
As earnings have declined across the world index for the last five years, people have stopped thinking about long term growth and earnings, because they are not getting any, and they have started to think exclusively about reliability in an uncertain world, noted Boucher.
“And what could be more reliable than an addict who comes back over and over again regardless of how much you charge him for his package of cigarettes? The tobacco sector has been one of the very best performing in the market over the last five years according to the world tobacco index.”
“We need to think about where is the big change in the future and how can we invest in companies that are the beneficiaries of that change?” said Boucher. “One of the places where we can see change on an absolutely vast scale is in de-carbonisation; the shift in the energy mix as a result of climate change threats,” he explained. “We’re going to see a big shift, but how big?”
There is a really interesting opportunity developing in fixed income; in green bonds, wind farm or solar park or something like that, highlighted Boucher.
Boucher pointed to the demographic profile in developed countries and said that old people consume health care, pets, cosmetics, and glasses, therefore Sarasin’s portfolio includes American multinational biopharmaceutical company Amgen, CSL, and Intuitive Surgical, that manufactures robotic surgical systems.
The thematic view also includes technology, cost-cutting (such as Lidl, Amazon, and other cost cutting retailers) and the “experience” trend. “It’s interesting how much society is now putting premiums on experiences, whether that’s tourism and travel or cycling,” said Boucher.
