Some of the best fund managers in the world are betting on a post-pandemic spending boom that will boost real-world businesses as economies reopen and people return to normal lives.
Investors from Aberdeen Standard Investments Inc. and GAM Investments at UBS Asset Management are increasingly investing in companies where face-to-face interaction is the norm – things like travel agencies, restaurants , offline shopping and “consumer experiences”.
“A lot of people feel that this is really going to lead to a new theme of the Roaring Twenties,” said Swetha Ramachandran, GAM’s Luxury Brands Equity fund manager, referring to growing opinions that post-pandemic spending will be reminiscent of the excess of years. 1920. It was then that euphoric consumers crammed into a spate of spending after World War I and the 1918 influenza pandemic. “There will be a lot of peacocks” as people begin to socialize, he said. -she says.
Investors have started to cram into cyclical stocks which are benefiting from an economic rebound late last year following good news on the vaccine front, while pulling out of high-value tech stocks. The rotation accelerated with the rise in Treasury yields in mid-February. Now, with stimulus checks crossing the United States – the recipient of half of the $ 2.9 trillion in savings accumulated around the world during the pandemic – consumer stocks will recover even more.
Granted, no one is saying the pandemic is almost over. Europe faces a slow rollout of vaccines, with restrictions on daily living in some countries, while the seven-day average of new Covid-19 cases in the United States has skyrocketed, showing cases in the United States are on the rise again and threaten a return to normal life. Digitization is here to stay – no retailer will return to a pure brick and mortar world.
But a short-lived shift to consumer discretionary stocks in November, when “reopen” trading became fashionable, has room for maneuver. A sub-gauge of global energy stocks has been the best performing by sector since late October, up 53%, while the consumer discretionary index is only 17% higher.
In fact, the gauge of global consumer discretionary equities is expected to return 17% over the next 12 months, according to data compiled by Bloomberg, while the S&P 500 Index is expected to rise 12%.
“People want to travel. They want to see a family they haven’t seen for a long time. They want to go out with friends, ”said Donny Kranson, European equity portfolio manager at Vontobel Asset Management.
Theme parks, airlines and even beer are back.
On the travel side, the funds bet on stay-friendly hotels like Marriott International Inc. and home-sharing company Airbnb Inc., theme parks like Six Flags Entertainment Corp. and even the online travel agency. Chinese Trip.com Group Ltd, listed in the United States. ., based on interviews with Miller Tabak + Co., Scottish Investment Trust and AGF Investments Inc.
Marriott has gained 11% this year so far, while Airbnb, Six Flags and Trip.com are up 19%, 41% and 11%, respectively. They all outperformed the S&P 500 in 2021.Restaurant chains like Cheesecake Factory Inc., and popular alcohol brands in largely closed nightlife spots, bars and restaurants like Heineken NV, Anheuser-Busch InBev NV and Pernod Ricard SA, which distills vodka Absolut, are also in play.
Large suburban malls that have adapted and allow social distance shopping should also do well, said Calum Bruce, fund manager at Ediston Property Investment Company.
Perhaps the most significant change that fund managers see in consumer appetites as life goes offline is the ‘premiumization’ of tastes in food, autos, cosmetics, and cosmetics. clothing. Capri Holdings Ltd., owner of Jimmy Choo, in the United States, and more affordable luxury brands like France’s SMCP, which owns the Maje and Sandro labels, are considered to benefit if the reopening theme comes to fruition.
Even high-end brands like owner Gucci Kering SA and China’s biggest stock, Kweichow Moutai Co., are staples as people trade, some fund managers say.
“In markets like China, strong premiumization trends are visible in segments such as beer, dairy, spirits, cosmetics, condiments, branded foods and four-wheelers,” said Shou-Pin Choo, portfolio manager for Asian equities at UBS Asset.
– With the help of Suzannah Cavanaugh