Investment funds that invest in health and wellness already existed, but DNCA Finance is now launching a thematic equity fund that invests in the sports sector. DNCA managers Boris Radondy and Simon de Franssu spoke to Investment Officer Belgium. “There are 340 listed companies in the world whose activities are closely related to sport. They represent a market capitalisation of $3,000 billion, which has increased sixfold in the last decade.”’
Indeed, Paris-based DNCA recently launched the DNCA Global Sport Equity fund, a Luxembourg-based global fund available in various classes, including Belgium. It is a thematic equity fund dedicated to the sports economy.
“Revenues from the global sports market are currently 1.100 billion dollars. This market is expected to grow due to the increasing number of sports fans - a growth of 3.5 billion is expected for 2025, so a plus of 30 percent compared to 2020 - and spectators of sports events, the development of new technologies and digitalisation. Thus, the sport-tech market is estimated to grow by 17.5 percent per annum by 2026,” Radondy said.
Why is sport an interesting topic?
“Sport today is an economy in itself. It is a 1.1 trillion dollar global market with secular trends: Health & Wellness, increased interest in sports performance and sporting events, technology and digitisation. These secular trends will drive strong growth in the sport economy. If you look at sports activity, by 2025 there will be 3.5 billion people participating in sports worldwide, which is 30 percent more than in 2020. Another segment of this economy, sporting events, will grow by 8 percent annually over the next five years.”
“The sports economy is also an asset class on its own. We have identified about 340 listed companies around the world whose activities are closely related to sport. They represent a market capitalisation of 2.500 billion dollars. The market capitalisation of this asset class has grown 4.5x in ten years. Finally, sport is in everyone’s daily life. It appeals to everyone, and we think everyone can appreciate the dynamics, momentum, and prospects of this economy.”
How does it fit into DNCA’s existing fund offering? DNCA has a value bias while this fund is growth oriented?
“Since 2018, DNCA also offers some thematic funds, such as a series of Impact funds called Beyond, including for example a Climate fund. DNCA Global Sport Equity is a thematic fund. We think sport as a theme has strong growth prospects, but we look for any good investment opportunity in this universe, with a focus on the quality of the company and its valuation.”
What are the selection criteria of the companies?
“We want to capitalise on the growth of the sports economy. Therefore, we need to be as pure as possible, investing in companies where most of the future growth will come from this segment. We also pay attention to the quality of the company’s brand and franchise and look for local and global leaders. Management and balance sheet are important considerations. Last but not least, we pay special attention to the companies’ SRI policies, reporting and efforts. The fund is integrated in the DNCA ESG process, every company in the portfolio has an ESG analysis. DNCA Global Sport Equity is classified as an Article 8 fund under the SFDR.”
What is the fund’s target clientele?
“Private clients, as diversification in portfolios and Branch 23 insurance contracts. We believe this thematic fund can appeal to anyone. The values of sport and well-being are alive and well among many Belgians. Many institutional investors are also looking for themes to diversify their portfolios.”
What does the final portfolio look like?
“The portfolio is well diversified across the sports economy. We think there are good opportunities in the whole theme. Less than one third of the fund is invested in sportswear. About 40 percent of the fund is from the sports goods segment (clothing, shoes, equipment).
The fund has 40 lines, with 5 percent cash. The geographical distribution is: 44 percent America, 33 percent Europe, 16 percent Asia Pacific.”
This article originally appeared on InvestmentOfficer.be.
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