Investment Themes Articles

Most investment portfolios have limited exposure to agriculture, but this under-represented sector is as an attractive asset class, driven by rising global food demand, shrinking arable land, and resource scarcity. While the global trends of population growth and a rising Asian middle class have long supported agricultural demand, supply constraints—exacerbated by the pandemic and geopolitical tensions—have created powerful tailwinds for agricultural investments.

With the S&P 500 rallying an historic 40% over the past twelve months, you’d be forgiven for thinking all is well with the US Government’s finances. After all, the state of the world’s largest economy is inextricably connected with the US Treasury’s financial health. Sorry to shatter that illusion, but the truth is very different. Do not read what follows if you prefer to believe in the US fairy tale…

Megatrends are long-term structural changes that affect the world we live in. Importantly, they shape communities, but they also create investment opportunities and risks. What Magellan has learned from historical megatrends is: 1) they often solve a problem through innovation; 2) the scope of the megatrend can initially be underestimated; and 3) the duration of a megatrend is typically longer than anticipated. There are numerous megatrends likely to influence markets that investors should consider: the shift to the cloud and generative AI, the ageing population, rising geopolitical tensions and so on. Today we highlight just some of the megatrends we are monitoring at Magellan.

Innovation has moved beyond being just a nice-to-have at the periphery of most portfolios—it’s now a key focus in investment strategies. With sectors like AI, renewable energy, and biotech leading the way, more investors are adjusting their portfolios to capture the growth potential of these cutting-edge technologies.

In recent years, emerging markets haven’t exactly been a sure-fire opportunity for investors. Many have retreated after a decade of flat earnings, turbulence in China, and more attractive returns from the US exposure, resulting in emerging markets trading at lower valuations than their developed market counterparts.

Investors may struggle to determine if a company’s management team are aligned with shareholders’ interests, wondering they are truly invested in the company's long-term success or merely focused on receiving their weekly salary. There’s one metric which is better than all others when it comes to assessing how invested management teams are in the future of their companies: significant, long-term skin in the game. Hence, recognising outperforming founder-led businesses can be a game-changer for investors.

Momentum is defined as ‘the impetus gained by a moving object.’ It’s an important concept that's at the heart of most success.. Tony Robbins explains why: ‘People who succeed have momentum. The more they succeed, the more they want to succeed, and the more they find a way to succeed.’

Learning from successful professional fund managers is often a shortcut to better investment results. It’s equally informative when there’s a noteworthy shift that brings a previously successful investment strategy into question. Enter the Dalio dilemma.

For many years since its 1989 peak the Japanese stock market underperformed its developed world counterparts, and most global investors’ Japanese allocations trended lower. But that was then and this is now. The Japanese market recently broke through its 1989 peak propelled by improved governance, yen weakness, and better capital management.

Bitcoin is now much easier to own for Aussie investors thanks to the ASX listing of the first such ETF last week. The move follows the lead of the US market, which opened the door to bitcoin ETFs in January this year. Investors have since poured billions of dollars into cryptocurrency ETFs, with US bitcoin ETFs collectively amassing over $57 billion of inflows within three months of launch, including offerings from BlackRock, Fidelity Investments, and VanEck.

With inflation and interest rates remaining higher for longer, the implications for which investment themes have been outperforming and underperforming in recent months has been profound.

With inflation and interest rates remaining higher for longer, the implications for which investment themes have been outperforming and underperforming in recent months has been profound.