Countless new funds are released every month. While many new funds follow old patterns, there are always innovative ideas. Most recently, the announcement by British asset manager Artemis that it would launch a fund with a focus on consumer brands attracted attention in investment circles.
• Artemis is launching a new fund in November: 25 to 35 companies with strong brands
• Fund manager Swetha Ramachandran highlights shifts in consumption patterns
• Selection criteria: Strong pricing power and market dominance
Analysts, investment advisors and other investment experts repeatedly emphasize that companies with strong brands are particularly resilient to crises and make excellent long-term investments. Stock market legend Warren Buffett also relies on strong brands like Apple or Coca-Cola. Now – in the midst of the global economic downturn – the fund company Artemis wants to monetize the strong attraction of brands to consumers for stock market investors.
Fund manager Ramachandran brings experience
The new Artemis fund will be managed by Swetha Ramachandran, who has been working at Artemis since the beginning of September 2023. For the last four years she had managed a fund with a similar focus at the Swiss fund company GAM: as part of the “GAM Luxury Brands Fund” she selected promising luxury brand stocks. For the newly launched Artemis fund, Ramachandran will select between 25 and 35 stocks. A common characteristic of these companies will be that they each stand behind strong brand names, some with decades of tradition.
Ramachandran justifies the new fund’s approach with the growing importance of stable and trustworthy consumer brands. The younger generations – especially those from East Asia, where an ever-growing middle class enjoys increasing purchasing power – also rely on well-known yet still popular brand names. In general, globally omnipresent brands from very different industries such as Coca-Cola, McDonalds, Apple, Louis Vuitton or the fashion brand Gucci, which belongs to the French Kering group, are included.
Ramachandran recognizes shifts in consumption patterns
Nevertheless, Ramachandran does not statically follow the consumption patterns that have been observed so far – on the contrary, the new fund should optimally adapt to medium to long-term changes so that investors can benefit from the shifting consumption patterns. Ramachandran sees new developments, particularly with regard to the younger generations: “There is currently a change taking place among consumers, both on a geographical level and in terms of generations: the Millennials [üblicherweise definiert als die Jahrgänge zwischen 1980 und 1997, Anm. d. Red.]Generation Z [1997-2012] and now also Generation Alpha [Geburtsjahrgänge ab 2012] “They each have different preferences,” as Institutional Money quotes the fund manager. While the lion’s share of consumption in recent decades has been concentrated in North America and Europe, Asia is now increasingly coming to the fore, and investment managers have to react to this.
In addition, Ramachandran recognizes an increasing experience orientation in consumption, while at the same time higher demands from the respective consumers can be observed. “Due to the growing importance of Millennials and Generation Z, the boundaries between ‘luxury’ and ‘premium’ are also blurring. And the definition of the ‘brand’ is shifting across all generations from a transaction-oriented to a more experience-oriented view. For example, older people are striving for “Consumers with higher disposable incomes are increasingly seeking to ‘premiumize’ their consumption habits – particularly in travel and health and wellness.”
These criteria will be crucial when selecting stocks
But what criteria does the fund manager use to select stocks? Two factors are of particular importance here. When selecting individual stocks from this supposedly growing sector, Ramachandran relies on strong pricing power, which guarantees a decent profit margin even in weak economic conditions and high inflation rates. On the other hand, the Artemis fund manager pays attention to the market dominance of consumer brands, which creates high market entry barriers for current and future competitors. In this respect, Ramachandran’s strategy is similar to the “moat” approach often cited in investor circles by Berkshire Hathaway boss Warren Buffett, whose preference for companies with an established business model and a strong competitive advantage has for decades produced enormous returns on capital for Berkshire shareholders.
Alex Stanic, Head of Global Equities at Artemis, is confident that the new consumer brand fund will provide investors with a high return. “We believe the new strategy provides a differentiated approach for fund managers, asset allocators and retail investors, allowing them to draw on Swetha Ramachandran’s wealth of experience in this attractive space and her understanding of its evolution.” The fund is scheduled to be launched in November and will include share classes from the euro, dollar and pound areas.
Editorial team finanzen.net
This text is for informational purposes only and does not constitute an investment recommendation. finanzen.net GmbH excludes any claims for recourse.
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