With emerging countries still enjoying growth in wages and consumer spending, Western firms are boosting their presence in the developing world. This is an exciting investment trend, say Jan Luthman (pictured) and Stephen Bailey, co-managers of CF Liontrust Macro UK Growth fund. By 2030 the Chinese middle class could be the most dominant in the world, they tell Investment Week. “The demographics are so powerful. We are seeing a narrowing of the wealth gap.”
Luthman and Bailey’s £139m fund looks for companies manufacturing vital everyday products. As Luthman tells FE Trustnet, “these are low-ticket, essential consumer staples”. The approach seems to work – the fund has a total return of 69% over ten years compared to a FTSE All Share index return of 57%, according to Bloomberg data.
Over five and three years the returns are 15.5% and 31% respectively, against an index return of 8% and 28.5%. The portfolio focuses on UK-listed equities (79% of the portfolio), with top holdings including Unilever, Vodafone and GlaxoSmithKline. It avoids “banks, the UK domestic and retail sectors [and] utilities due to political and regulatory risk”, says Jonathan Miller on Citywire.com.
Recently the likes of Heinz, Pepsi and Kimberley-Clark have been added to the portfolio. “China will be 25% of Heinz’s turnover next year – the company is growing at 17% per annum in Asia,” says Miller. As “people on low wages earn progressively more” they should increase their spending on “mainstream brands, which we in the West take for granted” – something the fund aims to cash in on.
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| CF Liontrust Macro UK Growth top ten holdings | |
| Name of Holding | % of assets |
| Unilever | 5.0 |
| Royal Dutch Shell | 4.8 |
| Vodafone | 4.8 |
| GlaxoSmithKline | 4.5 |
| BG | 4.5 |
| British American Tobacco | 4.2 |
| Reckitt Benckiser | 4.2 |
| Imperial Tobacco | 3.9 |
| Bristol-Myers | 3.9 |
| Pfizer | 3.8 |