The factors to look for in defensives
There are two stocks in the healthcare and infrastructure space which can help investors gain defensiveness in their portfolio, according to T.Rowe Price.
The companies that would be best able to manage through this period will likely be companies with strong pricing power, differentiated products, good industry structure and defensive volumes.
This included Resmed in the healthcare space and Transurban in the infrastructure sector.
Randal Jenneke, head of Australian equities at T. Rowe Price, said: “Resmed for example has a large underpenetrated market, and despite various input and logistics cost pressures, has been able to pass through price increases given their dominant market share and current lack of reputable competition.
“In infrastructure, Transurban for example has built-in price increases for its contracts. The nature of its cost structure brings high EBIT margins and margin stability. Anecdotally, you know the cost of tolls are rising when every second taxi driver makes a point or two about it.”
Shares in Resmed were down 14.5% since the start of the year and 5% over one year to 30 June while Transurban was up 4% since the start of the year and 0.4% over one year.
AUTHOR
Laura Dew
Recommended for you
Family office Lederer Group has progressed its takeover bid for the Elanor Commercial Property Fund, lodging a bidder’s statement with ASIC as it says the fund has been “unable to agree” on negotiation terms.
Magellan Financial Group is keen to enact further strategic expansions with income from strategic partnerships tripling to $31.1 million from the addition of Vinva during FY25.
Outflows have doubled in the property and infrastructure space to $1.3 billion with advisers instead favouring private markets as Morningstar data finds active property funds are struggling to outperform.
Fund manager HMC Capital is seeking to expand fundraising for its private equity vehicle into wholesale platforms now that it has achieved a three-year track record, while scrapping plans for a second fund.
