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Yearly return, %, 1997-2017
*Source: JPMorgan, Barclays, FactSet, Standard & Poor’s, Dalbar Inc. Indexes used: S&P 500, Oil: WTI Index, Bonds: Barclays U.S. Aggregate Index, Gold: USD/troyoz, Inflation: CPI. Returns are annualized (and total return where applicable) and represent the 20-year period 30.09.1997-30.09.2017
Return, indexed, Sears vs US retail sector stocks
Source: Bloomberg; data covering period 31.12.2012-31.01.2018
So, for investors that wish to allocate some or most of their capital to stocks, it’s important to ensure that this investment is put to the best possible use.
At Pictet Asset Management, we believe one way investors can make the most of their allocation to stocks is by investing in thematic equity funds.
Thematic investing is not new – we’ve been doing it for more than 20 years (Fig. 3). But it’s very different from what most investment firms do, and in several important ways.
Source: Pictet Asset Management
Fertile ground for thematic investments
Source: *International Energy Agency, **Boston Consulting Group, Pictet Asset Management
***Internet World Stats.
That’s where we believe the most attractive investment opportunities are. And unlike many other equity funds, our thematic stock portfolios invest mainly in smaller, specialised companies - firms with specific expertise and a clear competitive edge.
That’s a deliberate choice. History shows specialist firms tend to fare better over the long term than the large, diversified firms you’ll find in a mainstream stock index such as the S&P 500 or the FTSE 100, which are prone to a ‘conglomerate discount’ – a valuation penalty that’s applied to big, complicated businesses.
The differences don’t end there. What also sets our thematic equity funds apart is how they are run. Most equity portfolios available to investors are managed in one of two ways. Many are overseen by a generalist investment manager, a jack of all trades who picks stocks from a very long list of analyst recommendations.
Others follow strict rules-based models that leave little or no room for human judgement or skill. Passive, or exchange-traded funds, which invest in companies without due regard for their future profitability, governance standards or stock price, fall into this category.
Our thematic equity portfolio managers do things rather differently. They’re neither generalists nor rule-takers but seasoned specialists who’ve got to know their industries over many years and market cycles.
Experts in their chosen fields, our investment professionals don’t rely on analyst recommendations; they carry out their own detailed research – company by company – to find the most promising investment opportunities. They’re active managers in every sense.
And through our Advisory Boards, each portfolio manager has access to world-renowned industry practitioners and academics, experts with years of experience that can offer a fresh perspective on new investment opportunities (Fig. 7).
Source: Pictet Asset Management
Source: Pictet Asset Management
Important legal information
This marketing document is issued by Pictet Asset Management. It is neither directed to, nor intended for distribution or use by any person or entity who is a citizen or resident of, or domiciled or located in, any locality, state, country or jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation. Only the latest version of the fund’s prospectus, the KIID (Key Investor Information Document), regulations, annual and semi-annual reports may be relied upon as the basis for investment decisions. These documents are available on assetmanagement.pictet.
This document is used for informational purposes only and does not constitute, on Pictet Asset Management part, an offer to buy or sell solicitation or investment advice. It has been established on the basis of data, projections, forecasts, anticipations and hypothesis which are subjective. Its analysis and conclusions are the expression of an opinion, based on available data at a specific date. The effective evolution of the economic variables and values of the financial markets could be significantly different from the indications communicated in this document.
Information, opinions and estimates contained in this document reflect a judgment at the original date of publication and are subject to change without notice. Pictet Asset Management has not taken any steps to ensure that the securities referred to in this document are suitable for any particular investor and this document is not to be relied upon in substitution for the exercise of independent judgment. Tax treatment depends on the individual circumstances of each investor and may be subject to change in the future. Before making any investment decision, investors are recommended to ascertain if this investment is suitable for them in light of their financial knowledge and experience, investment goals and financial situation, or to obtain specific advice from an industry professional.
The value and income of any of the securities or financial instruments mentioned in this document may fall as well as rise and, as a consequence, investors may receive back less than originally invested. Risk factors are listed in the fund’s prospectus and are not intended to be reproduced in full in this document.
Past performance is not a guarantee or a reliable indicator of future performance. Performance data does not include the commissions and fees charged at the time of subscribing for or redeeming shares. This marketing material is not intended to be a substitute for the fund’s full documentation or for any information which investors should obtain from their financial intermediaries acting in relation to their investment in the fund or funds mentioned in this document.
EU countries: the relevant entity is Pictet Asset Management (Europe) S.A., 15, avenue J. F. Kennedy, L-1855 Luxembourg
Switzerland: the relevant entity is Pictet Asset Management SA , 60 Route des Acacias – 1211 Geneva 73
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Pictet Asset Management Inc. (Pictet AM Inc) is responsible for effecting solicitation in North America to promote the portfolio management services of Pictet Asset Management Limited (Pictet AM Ltd) and Pictet Asset Management SA (Pictet AM SA).
In Canada Pictet AM Inc. is registered as Portfolio Manager authorised to conduct marketing activities on behalf of Pictet AM Ltd and Pictet AM SA. In the USA, Pictet AM Inc. is registered as an SEC Investment Adviser and its activities are conducted in full compliance with the SEC rules applicable to the marketing of affiliate entities as prescribed in the Adviser Act of 1940 ref. 17CFR275.206(4)-3.