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5 years old, but wiser than its years: Capital Group New Perspective Fund (AU)

In just five short years, Capital Group New Perspective Fund (AU) has surpassed A$1 billion1 in assets under management.


The fund has been met with great success in Australia, balancing rapid asset growth with strong investment results. Since its launch, Capital Group New Perspective Fund (AU) has generated an annualised excess return of 2.4% above the MSCI ACWI ex Australia index.


Capital Group launched its New Perspective fund in Australia five years ago, giving investors access to a core global equity strategy with a successful 47-year track record of adding value across multiple market cycles and style-driven environments.


 


A key focus of the strategy is to invest in companies benefiting from changing patterns in global trade and shifts in the global economy. The five-year and A$1 billion milestones for the Australian fund presented an opportunity to reflect on some significant structural trends over the period and how they have influenced the portfolio, and consider what could lie ahead.


Some major trends shaping the global economy


How Capital Group New Perspective Fund (AU) has reaped the benefits of change


An advantage of the New Perspective strategy is its broad scope to capture change across sectors and geographies. Its focus on multinationals – both established and emerging – gives it flexibility, and diversity in its holdings.


Against a backdrop of change that has taken place over the past five years, how has the portfolio adapted?

 

The benefits of change:


Energy exposure has decreased, but exposure to utilities, particularly companies focused on renewable energy projects such as Orsted and Enel, has increased. Investments into companies positioned to benefit from the energy transition, like industrial gas producers, has also increased. Active investment decisions across energy and utilities have added 185 basis points in cumulative positive excess return over five years. 


Diversification in health care holdings has increased. An increase in the number of biotech holdings reflects the ‘basket approach’ our managers and analysts take to gain broad exposure to innovative, research-led companies. Aging demographics and consumer demand are fuelling growth for innovative drugs and treatments, increasing the number of investment opportunities available. 


Exposure to financials stocks has remained relatively consistent, however the composition has changed. The fund has moved into companies with innovative business models, such as financial exchanges, or those benefiting from exposure to growing wealth of emerging market economies, like Asia-based insurer AIA. Low relative exposure to banks, and a preference for more diversified financial companies, has contributed almost 500 bps in cumulative excess return over five years.


 


The value of consistency: 


Genuine long-term investors. Of our top 20 holdings at the end of September 2020, 18 were held at launch. The two exceptions are London Stock Exchange, where we initiated a position in February 2018, and Shopify which was first purchased in January 2020. An extended holding period allows managers to compound gains in successful companies. The cumulative impact of compounding over time is particularly powerful as it gives investors the opportunity to unlock the maximum potential value behind secular growth trends. 


Conviction investors. Four of the fund’s current top 10 holdings were also top 10 holdings in 2015. Amazon, Microsoft, TSMC and ASML have been conviction holdings in the fund over the past five years. The structural shift to cloud computing and proliferation in devices powered by semiconductor technology were two trends behind the long-term conviction positions in these tech leaders. Amazon Web Services and Microsoft Azure dominate the cloud, accounting for a 51% share of the market for cloud infrastructure service providers, 9 while TSMC and ASML have widened the technological gap with competitors in their highly specialised industry.

 
 
 


The information in relation to the index is provided for context and illustration only. The fund is an actively managed UCITS. It is not managed in reference to a benchmark. Past results are not a guarantee of future results.


1. Capital Group New Perspective Fund (AU) assets under management as at 31 October 2020.


2. From 20 November 2015 to 20 November 2020, the fund has returned 13.3% p.a. compared with the MSCI All Country World ex Australia Index (with net dividends reinvested) return of 10.9% p.a. Excess return is calculated arithmetically. Fund returns are in Australian dollar terms, net of management fees and expenses. Sources: Capital Group, MSCI


3. Source: Statista 2020, https://www.statista.com/statistics/379046/worldwide-retail-e-commerce-sales/


4. Source: Gartner, July 2020


5. IEA, Global Energy Review 2020. April 2020


6. Bloomberg, 2019


7. Source: EvaluatePharma, June 2020


8. Source: Bloomberg. 6.5% for the period Q3 2020. 16.9% for calendar year 2006.


9. Source: Statista, August 2020.



 

Past results are not a guarantee of future results. The value of investments and income from them can go down as well as up and you may lose some or all of your initial investment. This information is not intended to provide investment, tax or other advice, or to be a solicitation to buy or sell any securities.

Statements attributed to an individual represent the opinions of that individual as of the date published and do not necessarily reflect the opinions of Capital Group or its affiliates. All information is as at the date indicated unless otherwise stated. Some information may have been obtained from third parties, and as such the reliability of that information is not guaranteed.