Henderson’s Nick Anderson has been shielding his fund against two of the largest global growth contributors in recent years: China and the internet.
The manager acknowledged the increasing maturity of Chinese corporate and e-commerce businesses represented a competitive threat to established businesses.
But rather than trying to back the winners in the new world, he is steering his £502m Henderson Global Care Growth fund away from the fight altogether.
Mr Anderson, who manages the fund alongside Hamish Chamberlayne, initiated positions in US veterinary business VCA and insulation materials firm Kingspan earlier this year.
The manager said the new additions were largely immune to his identified threats.
“Often we find companies serving the consumer are under threat from two things – the internet and China. But in the pet business it’s very difficult for China or the internet to displace providers. This has been a very fragmented market,” he said.
VCA invests in specialist hospitals and diagnostics for pets.Mr Anderson admitted recent consumer spending growth in this area had been quite sluggish, but said the space would grow organically at between 5 and 7 per cent a year.
His fund can only hold firms that “enhance the environment and life of the community”, and this has seen it back away from a large number of MSCI World constituents. Mr Anderson said he still had plenty of opportunities despite the self-imposed restrictions.
“There are some very big megatrends in terms of climate change, population growth, changing demographics and the resources constraint,” he said.
“If you think about how the global economy is going to change over the next 10 to 50 years, these are the solution providers that we are investing in.”
The pair added London-listed company Kingspan – which operates in the UK, Europe and North America – after post-Brexit pessimism provided a good entry point. The firm’s share price fell 28 per cent in the two weeks after the June 23 vote, although it had surpassed its pre-vote level by August 24.
“We’ve looked at this company from time to time and what gave us the opportunity was the vote in the UK,” he said.
“People got very worried about demand for its products post-referendum and that provided us with a nice entry point into what we think is a very attractive long-term story. It still has just under 30 per cent of its sales in the UK, but [it’s] much lower than it used to be.”
In other changes in the fund, the pair sold out of US hospital equipment provider Steris, which the managers bought after it took over previous holding Synergy Health. They were concerned with how well the companies were combining.
Mr Anderson explained: “Synergy had been a very good holding for a long period of time. It was really just concern over the integration risk of the two businesses in the US, and that we thought we’d be paid a reasonably full price for the Synergy holding, so we thought it was time to take the money off the table for the time being.”
