The era of ‘new staples’
There is an era of ‘new staples’ in markets with companies like Microsoft offering as reliable returns as traditional consumer staples like Nestle and Procter and Gamble.
In a webinar, Nick Griffin, chief investment officer at Munro Partners, said the company was seeking ‘new staples’, those companies which had attractive free cashflow yield, were steadily growing and becoming an essential part of people’s lives.
Examples included Microsoft and Visa at one end of the risk curve and other newer firms such as Atlassian and DocuSign at the other.
“Microsoft is as close to a staple as you can find today, there are better opportunities there than buying a bond. You can put your money in the bank or you can buy Microsoft,” he said.
“Meanwhile, DocuSign has taken over, people won’t keep using wet signatures, but you have to pay a big premium for it.
“Both companies look good but one is more risky. We expect people to keep creeping up the risk scale towards companies like DocuSign. These are the companies that have invested to deal with the crisis and are impervious to economic risk, they have proved a safer place to be.”
Technology companies were a big part of the Global Growth fund’s portfolio with the fund holding four holdings in digital enterprise, four in digital payments, four in internet disruption, three in high performance computing and two in e-commerce.
This theme had been helped by the pandemic with habits built up such as video conferencing unlikely to be stopped once the pandemic was over.
The Munro Global Growth fund had returned 23.1% over one year to 30 June, 2021, according to FE Analytics, versus returns of 15.6% by the absolute return sector within the Australian Core Strategies universe.
AUTHOR
Laura Dew
Recommended for you
Six months after scrapping its planned deal with KKR, Perpetual is yet to make significant headway on the sale of its wealth management division but is focusing on alternatives for product development.
Platinum Asset Management’s NPAT has fallen by 89 per cent in FY25, with the firm confirming that it will be renamed as L1 Group following the expected completion of its merger with L1 Capital.
Statutory NPAT at Pacific Current has almost halved in FY25 to $58.2 million as the result of an investment restructure.
Being able to provide certainty about redemptions is worth fund managers pursuing when targeting the retail market even if it means sacrificing returns, according to Federation Asset Management.
