Investors need to focus on long-term thematic drivers of growth, amid tough economic times reflected in weak equity market returns.
In the first six months of this year the MSCI AC World Index fell 10.86 per cent in sterling terms, while the FTSE All Share fell 4.4 per cent.
Rachel Reutter, fund manager of J O Hambro’s UK Opportunities Fund, said: “It is at moments like this that investors need to focus on long-term thematic drivers of growth, along with disciplines around balance sheet leverage and valuation, to help ensure their portfolios have suitably resilient characteristics.
As real incomes are squeezed and social unrest builds, the areas of strongest spend are likely to be those which are essential to social stability. One of those is healthcare.
Reutter said: “Healthcare is [an] area where we see rising spend across the globe; spend that is only likely to increase as populations grow older. Particularly interesting are companies with specialist drugs and devices.”
Other areas of note include energy and the recruitment sector.
Reutter added: "Governments and businesses need to spend more on re-shoring production and the capex spend linked to this will benefit companies servicing infrastructure projects.
“The crisis in energy will see an acceleration in spend both to ensure supply of oil and gas and to build out increased renewables and nuclear capacity
“Politically there is a motivation to increase minimum wages, and to keep wage inflation as much as possible in line with the rising cost of living. Companies in the recruitment sector are likely to benefit, as are contract-based businesses where wage costs are passed on and companies where management is willing and able to invest in the technology necessary to offset rising costs.”
