It’s arduous to deal with long-term progress tendencies in the midst of a pandemic that produces nothing however uncertainty, however buyers have to do precisely that.
Electronic cost processing is one space by which short-term tendencies — staying at house and doing extra procuring on-line than ordinary — are accelerating a long-term shift that has proven no indicators of slowing.
Gert van der Geer of Geneva-based Pictet Asset Management mentioned in an interview 5 necessary gamers in the digital-payment house that he believes are good values for long-term buyers.
Pictet Asset Management has a workforce that focuses on “thematic equity strategies” to comply with long-term international tendencies that are anticipated to proceed no matter the financial cycle. The agency had $589 billion in property below administration as of June 30. Pictet’s Thematic Equities workforce runs mutual funds that comply with every of 12 fairness themes that are listed here.
Van der Geer co-manages the John Hancock Global Thematic Opportunities Fund
which holds 50 to 55 stocks that signify “the best ideas” from the funds that are managed in accordance with the 12 themes. The fund at present has all 12 themes represented in its portfolio.
When requested about his technique in mild of the present atmosphere of very low rates of interest and an enormous improve in the cash provide and rising inventory costs, he mentioned: “We don’t invest only for growth. We want companies that are able to capture an increasing part of that expanding pie.”
He mentioned he and the workforce have been on the lookout for stocks whose compounding potential was undervalued by the market.
Narrowing all the way down to the digital theme, van der Geer mentioned 5 corporations that are held by the John Hancock Global Thematic Opportunities Fund that he believes will present market-beating returns as the world continues to shift away from money to numerous varieties of digital payments. All 5 have recovered, after which some, from the market doldrums of March:
• Fidelity National Information Services Inc.
provides payment-processing companies to retailers, core processing, web banking and different companies to banks and likewise varied securities processing and associated companies via its Capital Markets Solutions phase. “There is a relatively small group processing electronic payments,” van der Geer mentioned. The stocks have been hit arduous with the decline in quantity as eating places closed and foot visitors in shops was curtailed. On the different hand, the adjustments in client conduct led to by the COVID-19 pandemic are accelerating “the speed at which cash is phased-out,” he mentioned. So his thesis for the inventory and the cost house is a really lengthy one. The firm is scheduled to announce its second-quarter outcomes Aug. 4. The John Hancock Global Thematic Opportunities Fund additionally holds FIS’s former guardian, Fidelity National Financial
which is the main issuer of title insurance coverage insurance policies in the U.S.
is a French cost processor that is “rolling up Europe,” in accordance with van der Geer, as it makes acquisitions to benefit from the improve in cross-border transactions. The firm additionally does enterprise in Latin America and Asia.
• The John Hancock Global Thematic Opportunities Fund holds Visa Inc.
which van der Geer mentioned was “a little cheaper” than Mastercard Inc.
with “similar exposure.” He mentioned price-to-earnings multiples are excessive for Visa and Mastercard, however that the U.S. credit-card processing giants are “in an enviable position.” For its fiscal third quarter ended June 30, Visa reported a 17% decline in internet income from a 12 months earlier, as cost quantity declined 10%, and a 22% decline in earnings per share to $1.07.
• Shares of PayPal Holdings Inc.
have shot up 77% this 12 months. The e-commerce trend has been an apparent boon, as second-quarter internet income was up 22% from a 12 months earlier and earnings per share have been up 86% to $1.29. Emily Bary interviewed PayPal CEO Dan Schulman on July 29. The firm is “a great example of a stock in prime position to benefit from strong secular trends as it benefits from a continued switch from offline to online retail,” van der Geer mentioned. He mentioned the shares “are not cheap, optically,” however mentioned he anticipated the inventory to maintain buying and selling at premium valuations: “How many companies of this size are growing revenue an expected 20% in this corona year and EPS 25%?”
• Alibaba Group Holding Ltd.
isn’t solely an e-commerce large. It holds Ant Group, which runs Alipay, certainly one of the largest cost processors in the world. Ant Group is predicted to have its personal preliminary public providing quickly. Alibaba hasn’t but mentioned whether or not there will likely be a full spin-off of Ant Group or the place the new shares will likely be listed. But van der Geer is obsessed with Alibaba and the IPO, as there will likely be “a valuation on an asset hidden within Alibaba.”
Here are the prime 10 holdings of the John Hancock Global Thematic Opportunities Fund as of June 30:
|Company||Ticker||Share of portfolio||Total return – 2020|
|Roche Holding AG||ROG,
|UnitedHealth Group Inc.||UNH,
|Thermo Fisher Scientific Inc.||TMO,
|Fidelity National Financial Inc.||FNF,
|Fidelity National Information Services Inc.||FIS,
|Cisco Systems Inc.||CSCO,
|Schneider Electric SE||SU,
|Alibaba Group Holding Ltd. ADR||BABA,
|Daikin Industries Ltd.||6367,
|Sources: John Hancock Investment Management, FactSet|
The John Hancock Global Thematic Opportunities Fund was established Dec. 14, 2018. That’s a brief interval for a fund with long-term targets. But right here is how the fund’s Class I shares have carried out, after bills, in opposition to its benchmark, the MSCI All Countries World Index, since that date:
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