New business models create new realities
New applications for drones are being found each day. For example, journalists use quadcopters to gather footage, and ornithologists use them to watch birds during nesting season. The applications for drone technology will only continue to grow, driven by yet another innovation: mobile internet access, which allows these machines to be controlled remotely. Another domain currently being revolutionised by mobile internet access is data collection. Ever greater quantities of information can be stored on ever smaller data carriers, such as chips or the Cloud.
This data is used in many different ways. Tesla and Alphabet apply it to their driverless car technology. Facebook uses the data collected to create targeted advertising. Online banners can be tailored to appeal to a particular audience that can be automatically expanded, refined or otherwise adapted at any time. Facebook gathers its user data for free: members offer it up willingly for the privilege of being connected to friends and receiving notifications in their newsfeed. The structural trend towards harnessing data as a resource is quickly gaining traction as the foundation for creating new technologies. Investing in companies that participate in this innovative drive could generate attractive returns.
Investing in structural trends with strong growth potential
The MainFirst Global Equities Fund invests in these budding structural trends early on. New technologies is a sector that shows excellent potential for long-term value generation, repeatedly achieving sales growth of around 20% and earnings growth of around 30%, and remaining on track to match this performance in future. In e-commerce, Amazon’s growth rate is currently around 25% with a market share of 43% in US online retail sales, and no end to its expansion in sight. The Chinese company Alibaba has a growth rate of 70% and a 70% market share in online business. Both firms are constantly developing their product range and use data to react to new developments and trends in order to consolidate their position as industry leaders.
Other new technologies and devices experiencing outstanding growth such as chips, semi-conductors, processors and cutting-edge automotive equipment are being produced by two German companies. Semi-conductor manufacturer Infineon provides solutions for the automotive and industrial sectors, as well as for the power supply industry, and boasts sales growth of 10% compared to the previous year. Aumann, which produces innovative electronic motor components, also achieved impressive results, increasing its sales by approx. 30% year-on-year.
It is important for investors to identify innovations early and invest in long-term performers to harness their strong potential for value generation. With this goal in mind, the MainFirst Global Equities Fund acquires shares in growth companies worldwide and maintains a portfolio of around 40 positions, with no sector or country restrictions and without tracking a benchmark. Stocks are selected based on qualitative criteria, using a bottom-up approach. In the event of high volatility, hedging is used to limit risk exposure. This strategy has enabled the MainFirst Global Equities Fund to achieve a total performance of 65% over 3 years, and over 92% since its launch in March 2013 (as at 31 May 2017, unit class A, ISIN: LU0864709349).