Services contribute the majority of GDP and growth in many emerging and developed countries and are little impacted by tariff barriers. In addition, developments in digitisation, mobility, and the internet are driving the creation of new services.
Within the service sector, we would highlight ecommerce, digitalisation, financial services, logistics and healthcare. We are finding opportunities within the Brazilian health insurance industry, including Notre Dame Intermedica and Hapvida due to their vertically integrated model combining health insurance and hospital operations resulting in a cost advantage.
We believe that secular growth opportunities continue to present themselves in services, even as manufacturing and trade get disrupted due to protectionism.
Kunjal Gala is global emerging markets co-portfolio manager at Hermes Investment Management