Investor Ideas

Article courtesy of JPM Global Consumer Trends Fund.

Why investing in changing consumer trends can yield strong long-term returns for your clients

Global equity investors looking for a durable, long-term investment theme with the potential to yield strong returns should consider tapping into changing consumer trends. This doesn’t mean investing in short-term consumer fads or fashions, but instead investors need to gain exposure to enduring changes in global consumption driven by three main factors: demographics & urbanisation, aspiration, and health & wellness.

There are an increasing number of  funds designed to  benefit from both the structural shifts in western spending patterns and the rising power of the emerging markets consumer.

Demographics & urbanisation

The funds seek out companies benefiting from global demographic trends. Rapid population growth and urbanisation in emerging markets is driving demand for a range of products from disposable nappies for babies and mortgages for home buyers through to mobile phones and cars for new city dwellers. In contrast, ageing populations in developed markets are driving demand for such items as hip replacements and anti-ageing products.

Aspiration

With billions forecast to join the ranks of the global middle class over the next few decades, demand for aspirational goods is set to soar. The fund taps into stocks benefiting from this trend, whether through luxury goods companies selling high-end watches and designer clothes to a burgeoning Far East market, or wine makers capitalising on surging global demand for Champagne.

Health & wellness

We are all spending an increasing amount of our disposable incomes on health & wellness. In the developed markets there is an increasing emphasis on healthy living and positive lifestyle choices, which is driving demand for organic foods, slimming products and health club membership. In emerging markets the emphasis is much more on improving healthcare and better living standards, whether through demand for better hygiene products such as shampoo and toothpaste, access to cheaper drugs or the wider availability of health insurance.

Long-term trends, not short-term fads

These are just a few examples of opportunities created by sustainable, long-term consumer trends. We believe they offer investors a very interesting take on global markets. As well as being inherently diverse they are focused on sustainability and durability, with profit potential tied in to long-term demand.

As we’ve seen, these trends can emerge from any location throughout the world. They can spring from companies in thriving emerging markets or in western companies whose sales are benefiting from changes in consumer demand.

The success of one such fund, JPM Global Consumer Trends Fund, stems from its ability to identify the companies that are benefiting most from these long-term changes in global consumption and invest in them at an early stage. It’s this focus on long-term trends rather than short-term fads that make the fund the ideal way for your clients to profit from the compelling opportunities provided by the global consumer theme.

To learn how the JPM Global Consumer Trends Fund can boost growth in your portfolio call us for a further discussion.