by Nick Britton
Nick Britton
As someone with the luxury of a 20-year time horizon for my investments (if not longer) I’m interested in what the world is going to look like by the time my kids have left home.
According to the FT’s Martin Wolf, who spoke at the AIC conference last month, Asia will make up more than half the world economy by 2040 ‘unless something catastrophic happens to stop it’. India is set to grow especially fast, roughly doubling its share of global GDP as the US, Europe and even China all see theirs shrink over the next 20 years.
But it won’t necessarily be a smooth journey. If you think politics in the UK is messy, have a look at what goes on in India over the next few weeks. The country’s general election starts today but doesn’t finish till May, largely due to the logistical difficulties of getting 900 million voters to polling stations. Coincidentally, results are due to be counted on 23 May, when it looks increasingly likely we will be trudging to the polls to elect MEPs.
Modi is still favourite to win, though some of the gloss has come off since his triumph in 2014 and he may need to form a new coalition in order to govern. In this month’s Spotlight we hear from investment company managers who are fairly sanguine about potential outcomes. David Cornell of India Capital Growth, for example, believes flagship Modi reforms like the goods and services tax and the bankruptcy code are unlikely to be reversed. Other managers hope to use any volatility around the elections as an opportunity to snap up bargains. Private sector banks, construction companies and India’s dynamic IT sector are all tipped for future success.
Given a long enough time horizon, elections shouldn’t overly concern us. Instead, we should probably be more exercised about the range of burning questions that have been united under the (admittedly uninspiring) acronym “ESG”.
ESG is increasingly regarded not as a constraint to investing or a niche market for millennials, but an indispensable part of risk management. Austin Forey, manager of JPMorgan Emerging Markets Investment Trust, puts it well when he says: “A business simply isn’t thinking about its long-term future if it’s destroying the environment or abusing the community in which it operates.” You can read more thoughts from Austin and other investment company managers here. It is striking that many investment companies, with their long-term approach to investing, are demanding equally long-term thinking from the companies in which they invest.
That almost brings me to the end of this month’s Spotlight, but before I go, don’t forget to read Ian Cowie’s latest column about the lessons he’s learned over the 30 years since he started investing. I was interested to see that one of his longest held and most successful investments is JPMorgan Indian. It was called Fleming Indian when he bought the shares for 63p in 1996; they’re 719p now. The current manager, Rukhshad Shroff, is quoted in this month’s Spotlight.
Nick Britton, Head of Intermediary Communications, AIC
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30 April BMO Breakfast Seminar: UK Real Estate - Where do the opportunities lie? (London) Hear from BMO's property managers, including F&C Commercial Property's Richard Kirby and F&C UK Real Estate Trust's Peter Lowe. The seminar is being held from 8.30am to 10.30am at BMO's London offices and full details are available here. 30 April-1 May Morningstar Investment Conference (London) Morningstar’s flagship two-day conference has a varied line-up of speakers including Jonathan Ruffer (Ruffer Investment Company), Marcus Phayre-Mudge (TR Property) and Nick Britton (AIC) - all of whom are scheduled to present on 1 May, though timings are subject to change. See the full agenda.
21 May-20 June Investment trust workshops (14 UK locations) Providing a comprehensive introduction to investment trusts in a friendly and practical way, the AIC’s workshops have been very highly rated by previous attendees. We are visiting 14 locations around the UK including Birmingham, Derby, Edinburgh, Glasgow, Leeds, Liverpool, London, Manchester, Newcastle and Swindon. See a full list of locations and dates.