Guinness Asset Management provides specialist funds that provide exposure to specific themes that Guinness Asset Management expect will generate above average growth. The Guinness Global Thematic Equity Fund takes the best ideas from within those themes to create a fund that diversifies the risks inherent in those specific themes, while retaining the emphasis on long term growth. The fund holds around 30 equally weighted positions. The fund is initially invested in the following themes that are managed as funds by Guinness Asset Management:
Global Energy
Rising energy costs have signalled the end of cheap oil. Yet global energy consumption continues to surge. Fossil fuels will remain the predominant world energy source for decades to come and depletion of supply will drive energy prices higher. This will create a favourable environment for companies with resource reserves and for their service providers and distributors.
Alternative Energy
A further consequence of rising energy prices will be that the viability of alternative energy technologies will increase. There are opportunities to invest in companies that will participate in the growth of alternative energy as it becomes a significant part of the global energy mix. Energy security and climate change concerns provide a favourable political backdrop that is accelerating alternative energy uptake.
China and Hong Kong
The economically explosive mix of massive capital investment, rapid industrialisation and burgeoning domestic consumer economy presents a rare opportunity to invest in a nation poised to become the next economic superpower. Underpinning the investment case for China is our belief that rising incomes and a spreading of wealth will lead to the creation of a middle-class consumer market which has the potential to be equivalent to the US or Europe with then next ten years. This will provide a new and arguably more sustainable growth driver than the direct investment spending of the past thirty years.
Asia Focus
Asia has risen to global economic prominence over the last thirty years on the back of its manufacturing prowess, producing competitively-priced products for Western consumers. Its skills are now comparable with any region in the world. The process of mass industrialization has improved the standard of living and household income for many in Asia. The result is the formation of a vibrant Asian middle-class, reaping the rewards of the region's economic development. We believe the rise of the Asian middle-class is a long term transformational theme that investors cannot ignore.
Innovation
There are exciting opportunities in companies that are creating value through original thinking. This could include developing new technologies or driving more efficient processes or companies that are well positioned for advances in technology, communication, globalism, and innovative management. An innovative approach to product development, operational processes or business practices is the distinguishing attribute for inclusion.
Equity Income
Our approach is to look globally for high quality companies that can grow their dividends into the future. We do not simply look for companies with a high dividend yield as this can often signal a company which has an underlying problem. Instead we look for quality companies with a history of generating consistently high returns on capital through an economic cycle.
Money Managers
The key attraction of the global money management industry is that successful companies in the sector can enjoy both very high rates of return on capital (not much is required) and an earnings growth rate much higher than the underlying investment returns as additional assets are raised.
Further detail on these themes can be found in the literature for the specific funds.