LONDON and NEW YORK , July 28 /PRNewswire-FirstCall/ -- Newton* has unveiled four new themes set to drive future trends and subsequent stock selection.
Newton uses a dynamic framework of long-term themes to help develop an understanding of how the world is changing and where investment opportunities are likely to appear. The company believes the credit crisis marked an important turning point for financial institutions, companies and investors globally, with the four new investment themes being; 'All Change', 'Uneconomic Growth', 'More Government' and 'Construction and Reconstruction'.
Iain Stewart , a Director of Investment at Newton and the driver of the Newton thematic investment process created over 20 years ago, said: "As the credit crisis has well and truly hit, our attention has turned to the long-term implications of the crisis for investors. Our all change theme forces us to think about a world in which credit is no longer cheap and abundant. That this also appears to be the case for both food and energy makes the transition all the more profound.
"Against this backdrop of tighter credit conditions, we have favoured stable growth businesses which are capable of generating cash throughout an economic cycle. We have been avoiding companies which have relied upon the unsustainable growth of cheap credit such as many western banks, investment banks and real estate businesses."
The uneconomic growth theme relates to how global economic activity and inflation measures are distorted by currency pegs, price controls and subsidies. Newton believes some supply chain arrangements, such as outsourcing to China , could come under pressure. This could favour local manufacturers that operate closer to the consumer.
The construction and reconstruction theme highlights the 'megatrend' in global infrastructure. While spending on global infrastructure including transport, telecoms and utilities has grown rapidly over the past few years, Newton believes infrastructure spending in less-developed economies continues to be a solid growth area in a world experiencing a cyclical slowdown.
The more government theme is based on the premise that the recent financial crisis will lead to more government intervention. Newton believes this form of managed capitalism will have a detrimental effect on global trade and corporate profits. Domestic based 'consumer champions', along with companies operating in the security, surveillance, aerospace and defence sectors are expected to benefit.
Two of Newton's themes 'debt and credit' and 'becalmed' which contributed to strong performance relative to benchmarks in international equity (EAFE Plus), global equity and global bonds during the credit crisis of 2007, have been removed and updated with the four new themes**.
In 1998, Newton was acquired by Mellon Financial Corporation, which merged
with Bank of New York Company, Inc., to become The Bank of New York Mellon in
July last year. Newton today forms part of the
The Bank of New York Mellon Corporation is a global financial services
company focused on helping clients manage and service their financial assets,
operating in 34 countries and serving more than 100 markets. The company is a
leading provider of financial services for institutions, corporations and
high-net-worth individuals, providing superior asset management and wealth
management, asset servicing, issuer services, clearing services and treasury
services through a worldwide client-focused team. It has