New consumer spending patterns create the most profitable investment opportunities, says Peter Kirman of JP Morgan...
... and investors are being warned not to ignore consumer sectors...like Zimmer frames for the aged of Japan or disposable nappies for the millions of babies in China.
Kirkman, manager of the JPM Global Consumer Trends Fund urged investors not to overlook the power of the consumer post credit crunch and he believes that many are missing out on some of the better growth stories of the 21st century.
Many emerging market portfolios do not have high exposure to the consumer, which leaves a gap within investors’ portfolios. But, buoyed by good results within his fund, Kirkman said: “The global consumer growth story is not reliant on whether global consumer demand overall is rising or falling, but on the emergence of new consumer spending patterns within that consumer pool. That’s where the most profitable opportunities lie.”
The JPM Global Consumer Trends Fund was launched in April 2008 and to the end of May 2010, returned 34.5% compared to the MSCI World Index which returned 3.9%.
Kirkman said: “Global consumer patterns are changing constantly. Of course, the drivers of these opportunities and where they reside is what matters. It’s clear to us, that there is a global shift in consumption towards emerging markets. By 2015 emerging markets are expected to account for 37% of global consumption, which will make it the largest consumer by region ahead of the US and Europe.”
The fund manager gives examples of companies worth investing in. Zimmer and Medtronic are poised to do well in Japan as they make products for the elderly and the Japanese population is aging fast.
Kirkman also said: “In emerging markets there are good investment prospects even at the lower end of the spending scale. For example, the UK has 1.7m babies, with 90% using disposable nappies while China has 40m babies with less than 10% using them– so the capacity for growth is considerable.”
The manager also said that outlook for aspirational spending in places like China will continue to be positive as demand for certain luxury brands continued to rise.©2010 funds europe