With a long-term thematic approach, investors may bristle at
paying for day-to-day management fees. If a theme takes years or even decades to
play out, does that mean portfolios should change very little in that time? And
if thematic investing is so easy, then why not just look at the themes in which
some of the big institutions are investing and independently create a
buy-and-hold portfolio? The professional thematic manager’s response is that
although the guiding themes are long term in nature, they also add value in the
short term. "Within our risk management framework, we seek to exploit
mispricings in asset values," Kratz says. "For example, our disequilibria and
distressed themes are constantly replenished with ideas. In the distressed
theme, companies will lose their distressed status over time. Those stocks are
then sold and replaced with other companies that display distressed
attributes."
Rundle adds, "I think you always have to have someone with a
hand on the tiller."
DWS Scudder separates investment themes into three categories:
one that should benefit from strong market environments; one for weak market
environments; and one for any type. Below are themes and corresponding portfolio
weightings of the DWS Scudder Global Thematic Fund as of the end of 2006:
THEMES IN STRONG MARKETS
Talent and Ingenuity:
Companies that thrive on human talent without requiring investments in hard
assets. Portfolio allocation: 19 percent. Supply-Chain Dominance:
Companies that are gaining the greatest leverage over their suppliers, customers
and competitors through better economics and cost savings. Allocation: 11
percent. Asymmetric Negotiators:
Companies that are able to conduct one-sided price negotiations as a result of
their access to raw materials, often companies in oil and natural gas.
Allocation: 10 percent. Large Units: Companies
benefiting from a number of changes, such as the emergence of a sizeable middle
class, the growth of consumerism and increasing capital investment, taking place
in China and throughout the larger Asian continent. Allocation: 8 percent. Security: Companies that safeguard people and their assets and information.
Allocation: 5 percent. THEMES IN WEAK MARKETS
New Annuities: Companies
that can benefit from the predictable, long-term returns generated by their
diversity of business lines and measurements. Allocation: 11 percent. Market Hedge: Companies that
deal in real assets such as gold that have traditionally served as a store of
value against depreciating global currencies and provided insurance against
unfavorable events such as natural disasters. Allocation: 2 percent. Private/Public Partnerships:
Companies that partner with governments and regulators to provide important
public services, which may allow these companies to deliver longer-term
investment returns amid difficult economic or market environments. Allocation: 2
percent. THEMES IN ALL MARKETS
Disequilibria: Companies
that can benefit from changes to their business models made in response to the
dynamics of their respective industries. Allocation: 19 percent. Exatrophy: Companies
emerging from a period of stagnation. Allocation: 7 percent. Global Agribusiness: Companies that address the needs of the growing global population,
including companies specializing in land, fertilizer and aquaculture.
Allocation: 4 percent. Distressed Companies:
Companies whose stocks are valued excessively low, often because of structural
flaws in the international financial markets or short-term misperceptions of
risk by those markets. Allocation: 2 percent.
John Ferry is an Edinburgh, Scotland–based financial writer and a
senior correspondent for Worth.
|
