UKNov 7 2017

Axa’s Thomas wants e-commerce to boost £3.3bn fund

twitter-iconfacebook-iconlinkedin-iconmail-iconprint-icon
Search supported by
Axa’s Thomas wants e-commerce to boost £3.3bn fund

Nigel Thomas, who runs the £3.3bn Axa Framlington UK Select Opportunities fund, believes technological change presents waves of undiscovered opportunities for investors.

Mr Thomas’s fund has returned 108 per cent over the past decade to 7 November, compared with 75 per cent for the average fund in the IA UK All Companies sector in the same time period.  

He said he believes the global economy and UK productivity is growing at a much faster pace than is being captured by economic data, while he thinks technology is driving inflation down at a pace not captured by the data.

Economist James Carrick, who works at Legal & General, is another who subscribes to this view.

He said the economic boom that happened to the world in the mid-1990s actually occurred because statisticians had learned by then to accurately capture the positive impact rendered by technological advances that actually happened in the late 1980s.

Mr Carrick’s view is that this will happen in the future to economic statistics covering the present time.

Mr Thomas said UK productivity looks particularly low compared to other countries because e-commerce is much more popular with UK consumers, than with many others globally.

He said: “Back in 2000, there were 80 billion photographs taken, compared to 1.6 trillion in 2015.

"Over this period the price per photo dropped from 50 cents to zero due to your smartphone; these instant digital photos eliminated most monetary transactions concerning processing photos.

"This also begs the question why does the UK compare unfavourably when productivity data is compared and analysed? It is because we have embraced e-commerce as a nation.

"We have the second highest business-to-consumer e-commerce activity in the world at 6.1 per cent (China has the highest at 7.0 per cent).

"We have the highest internet penetration of over 15-year-olds in the world at 93 per cent (second are Japan at 91 per cent) and we have the highest average spend online per capita at US$4,018 (£3,056) the United States is second at US$3,428 (£2,607).”

Another example of this is contactless payments, which effectively make every transaction by a retailer cheaper to process, which means the cost of getting goods to market falls. 

When it comes to investing in these trends, Mr Thomas prefers niche operators.

He bought shares in Eddie Stobart, a logistics company.

He said this company returns items back to online retailers that have been returned by customers, and as online shopping grows, so will demand for this service from Stobart.

Mr Thomas has also bought the shares of Bodycote, a technology company whose products extend the life cycle of metals and alloys.

Darius McDermott, managing director at Chelsea Financial Services, said his clients have long invested in Mr Thomas’s fund and the returns have been very strong over that time.

david.thorpe@ft.com