Megatrends as a key component of structural growth

We want to zoom in on one important component of our bottom-up investment approach: the identification and analysis of the megatrends and structural growth trends to which companies are exposed. We believe that correctly identifying structural shifts in underlying end-markets for our companies is an essential ingredient to achieving long-term outperformance. Evolving profit pools provide some firms with an ongoing growth tailwind while others face a continuous uphill battle. As quality growth investors, we seek to invest in businesses that benefit from such growth tailwinds – and avoid those battling a relentless decline. This is something that we have always done. However, along with the overall rise of thematic investing, funds’ exposures to structural megatrends are receiving increasing attention. More than in the past, our investors are approaching us for a better understanding of our portfolios’exposures beyond the simple regional or sectoral splits. As you might be aware, we follow a disciplined bottom-up investment approach, in which top-down thematic considerations play no explicit role. However, given our emphasis on structural growth as part of our analysis, it is maybe unsurprising that we, too, are exposed to many of the long-term megatrends so often discussed. In our case, it is just a natural outcome of our bottom-up process. In this publication, we will discuss the structural megatrends we find attractive and why, as well as showcase our exposure.

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