- 2023 Best of the Best Awards Supplement
- Allspring Global Investments
- BNP Paribas Asset Management
- Capital Group
- Cohen & Steers
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- Hang Seng Indexes Company
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- Lion Global Investors
- Manulife Investment Management
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- 2023 Best of the Best Awards Supplement E-MAG
Taking a new perspective on global investing
In many respects, life has changed beyond recognition since 1973 when Capital Group launched its New Perspective strategy. However, as it reaches its 50th anniversary, many of the founding principles remain firmly in place, as its team of portfolio managers continue to seek out long-term opportunities for investors. Using a bottom-up approach to identify companies that stand to gain from changing global trade patterns and economic and political relationships, to this day the strategy continues to focus on identifying global champions early and investing in them for the long term. As such, this has culminated in a strategy that is genuinely unconstrained by geography, sector or style.
And as with anything that has had success over a long period of time, a central question with the New Perspective strategy is how it has managed to stay relevant and deliver durable long-term outcomes against a constantly changing backdrop. The philosophy is as relevant to today’s macroeconomic and geopolitical environment as when the strategy was first launched, underlining the longevity and durability of the strategy. This consistency and continuity have also been evident in the investment process behind the strategy, management of the portfolio and the returns for clients across a range of market environments. Indeed, the strategy has comfortably outpaced the broader market over the full 50 years1, with an investible universe comprising a spectrum of current and potential future global champion companies that offer an attractive combination of structural growth and resilience.
“Investing across this spectrum has been key to delivering durable outcomes over many market cycles,” says SVP, Head of Asset Class Service for Asia Pacific at Capital Group Andy Budden, who adds that the resilience of the approach is illustrated by the fact that over its history the strategy has delivered a positive absolute return to investors over every 10-years rolling period – and over 98% of all rolling five-year periods. It has also been remarkably consistent – as well as outpacing the broader market (represented by the MSCI ACWI index) over the full 50 years, outstripping the market in over 80% of all three-, five- and ten-year rolling periods as at end-March 2023.1 It is this consistency that has won Capital Group the accolades of Best Performing Global Equity (10 years and 20 years) in Asia Asset Management’s of the Best of the Best Awards 2023.
Capital Group counts research as the cornerstone of how its team of investment analysts gain deeper insights into companies. As at end-December 2022, equity analysts at Capital Group average 14 years of experience.
“There is accountability at every step of the process: analysts don’t just make money, and like portfolio managers, are compensated with an emphasis on long-term investment results. Furthermore, a ‘research portfolio’ of analysts’ best ideas forms around 20% of New Perspective’s holdings and has been a key part of the strategy since inception,” explains Budden.
“As in many walks of life, time horizons have shorted in the investment world over recent years, particularly as volatility has increased. However, looking beyond short-term noise is even more critical during turbulent periods, and our portfolio managers and analysts have always remained focused on what we believe to be our most enduring competitive advantage: a truly long-term investment horizon,” he adds. As at end-December 2022, 61% of the New Perspective portfolio has been held for five years and 43% for more than eight.
There have also been a number of enduring themes over many decades, again showing this long-term research-driven approach in action. Indeed, a look at New Perspective’s inaugural annual report from 1973 shows that among its top holdings was National Semiconductor, a company that ultimately became part of Texas Instruments in 2011. Fast forward to today and the strategy has three of the world’s leading semiconductor businesses – TSMC, ASML and Broadcom – in its top ten holdings, owned consecutively since 1999, 2000 and 2010 respectively. Also, among the strategy’s top 20 holdings at the end of March 2023 is Nestlé, which was first added to the portfolio in 1988, at which point the Swiss food and drink company had a market capitalisation of around US$9 billion. Today, it has a value of around US$318 billion, a growth of 35 times. Other top holdings include Microsoft (first bought in 1997 and held consecutively since), Novo Nordisk (since 2003) and Tesla (since 2014), highlighting a proven track record of investing in global champions early.
The long-term mindset embedded in Capital Group’s investment combines independent high-conviction decision-making with the natural diversification that comes from multiple perspectives. Known as The Capital System™, it combines independent high-conviction decision-making with the natural diversification that comes from multiple perspectives.
“We divide portfolios into segments, each run by an individual manager and every investment team represents a diverse set of backgrounds and styles. Each manager brings their own unique insights, but what is common across the board is that we do not try to capture inflection points or second-guess shifts in markets over the short term. Instead, we invest in those companies driving, shaping, and benefitting from long-term structural change,” Budden explains. “Over its lifetime, New Perspective has had 22 portfolio managers, nine of whom continue to run the strategy today. Succession planning and generational changes are built into our system of managing money for our clients, and managers have full flexibility to pursue long-term opportunities deriving from transformational changes in the global economy. Over 50 years this has allowed New Perspective to reposition several times across different market regimes and cycles to identify and invest in leaders of the global economy,” he adds.
Looking back on 50 years of global investing, the benefits of New Perspective’s consistent yet structurally flexible approach, with minimal style, sector or geographic constraints and a growing opportunity set, are evident. Likewise, Capital Group’s genuinely long-term approach, with The Capital System reducing key person risk over multiple decades and looking beyond short-term fluctuations, has created continuity of investment results for clients over several decades.
“Flexibility remains as important now as ever before, as we are seeing ongoing migration from narrow to broad market leadership – after a handful of technology-related stocks have dominated for years. Now, we expect a much wider range of companies, sectors, and countries to drive returns, and for growth investing to evolve,” he opines, pointing to healthcare, the energy transition, supply chain reconfiguration and shifting demographics.
New Perspective will no doubt continue to offer a well-balanced portfolio seeking durable outcomes over the long term, focusing on companies that are resilient, adaptable to change and benefiting from transformations in the global economy.
“Throughout five decades of constantly shifting tides, New Perspective’s focus on world-leading, and potentially future world-leading companies has remained the bedrock of [our] investment philosophy. In this respect, at least, it is comforting to think that the more things change, the more they stay the same,” concludes Budden.
All data as at March 31, 2023 and attributed to Capital Group unless otherwise specified.
1. This information is correct as at March 31, 2023, using data for the Capital Group New Perspective Composite, shown for illustrative purposes only. Results for the Capital Group New Perspective Composite are asset-weighted and based on initial weights and monthly returns. Data is shown in US dollars, net of management fees and expenses for a representative retail share class (B) applying the maximum Total Expense Ratio (TER). Based on average rolling returns p.a. since inception of the strategy on March 31, 1973. Data compared with MSCI All Country World Index (ACWI) (net dividends reinvested) from September 30, 2011; previously MSCI World (net dividends reinvested). Sources: Capital Group, MSCI
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