Pictet-Human wants to invest in private services in the fields of education, leisure and healthcare. The new fund, which could be considered a ‘human counterpart’ of the asset manager’s flagship Robotics fund, invests in three themes with predictable future growth that should exceed 10% over the next three years.
Pictet launched the fund in December 2020 to tap into a number of powerful consumer trends. ‘Our fund aims to invest in companies that make it easier to embrace the technological and demographic changes that are radically transforming our daily lives. The fund will primarily invest the new generation of companies that offer services to consumers along three different segments, which are the key building blocks of this strategy,’ says portfolio manager Gilian Diesen.
The first segment is ‘lifelong learning’. This ranges from traditional schools to online education models to services that aim to enable continuous training during one’s professional career. The second major axis in which the fund invests relates to specific personal services. This segment includes, for example, online dating sites, meal delivery or care homes. Finally, the third major axis includes leisure. This is a broad sector, in which we find, among others, streaming services, developers of online games and the travel sector.
Subscription models
‘The balance between these three axes will depend on the individual opportunities we find,’ says Diesen. ‘So there is no predetermined weighting. The biggest allocation we currently have is in education services, which accounts for 40% of assets under management.’
The portfolio invests in established blue chip companies such as Disney, but also in smaller growth names like Takeaway.com, Match.com and IDEXX. The fund has an allocation of 25% to emerging markets, where it invests mostly in private education companies. 45% of assets under management are invested in non-cyclical consumption, and 20% in healthcare.
‘All these companies have growth prospects of more than 10% over the next three years. But the secular trends that underpin these different sectors will persist for the next 20 years. The companies exposed to these themes are often based on a subscription formula, which ensures predictable growth with recurring cash flows,’ says Diesen. With its focus on a companies with subscription models, the fund’s strategy shows significant overlap with the Subscription Economy Fund launched by Thematics Asset Management in early 2020.
As with the other funds in Pictet Asset Management’s range, stock selection is based on a thorough analysis of the companies and whether they fit the investment theme. The portfolio is concentrated in 35 to 50 positions and only companies with a high thematic exposure (more than 50% of turnover) are eligible.