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Investment funds

The value of an apple, a mouse wearing gloves or the spark of life.

Quality and the price-setting ability
Invertir en calidad y poder de fijación de precios
Categoría
Investment funds
Tipo de contenido
Actualidad
Tiempo de lectura
minutos
Publicado
15 Nov 2022
We are talking about robust brands. Brands that at times of inflation, like those we are experiencing today, retain dominant positions, maintaining the durability of their brand through the phases of the economic cycle while being able to generate higher returns. These are high-quality companies.

Why invest in this trend?

  • Intangible assets that are hard to imitate.
    Companies with established brands, with high returns on invested capital (ROCE), companies able to extract good operating returns from their capital.
  • Companies with price-setting power.
    Companies with good and stable gross operating income, and recurring income that helps maintain consistent profits regardless of the economic cycle, being very attractive during slowdowns.
  • Companies with robust balance sheets.
    Companies with high capacity to generate cash flow, low financial leverage and low needs for capital.
Invest in quality 1
Companies capable of managing rising raw material costs by increasing prices for consumers.
These companies have more favourable positions during difficult economic periods, as they are able to achieve both stable margins and profits.
  • Stable profits.
    Inflation is accompanied by central banks increasing interest rates, which impact directly on the economy through slower growth. Companies with consistent earnings are less vulnerable in the current economic conditions.
  • Operating efficiency.
    Quality companies that are well run, with high returns on the capital employed, tend to fare better in times of economic volatility. Companies that grow at high, sustainable and constant rates and have a strong profile in environmental sustainability, social and corporate governance criteria.

Price-setting power

A history of being able to maintain gross operating income in the face of volatile costs


Source: Morgan Stanley

Six characteristics of investment strategies that tend to reduce downside risk.

  • Sectors and companies considered high quality.
  • Strong brands.
  • High cash flows.
  • Low capital intensity.
  • Low levels of debt.
  • Good management.
Invest in quality 2

Investment universe

El universo de inversión se centra en aquellos sectores en los que el beneficio aguanta mejor en épocas económicamente complicadas.

  • La importancia de activos intangibles y creación recurrente de caja tienden a orientar la cartera hacia compañías debienes de consumo, salud, IT software y servicios, evitando sectores basados en modelos de negocio intensivos de capital o probabilidad de obsolescencia tecnológica, como podrían ser el sector de las telecomunicaciones o el automovilístico.
  • Compañías que tienen altos estándares de calidad, como ingresos que crecen a tasas elevadas, con altos retornos sobre el capital empleado.

What do the experts think?

  • The companies that win in the current environment will be those that can absorb and pass on price increases while keeping costs under control, as these factors determine the sales margin on their products and services.

Our investment proposal

Invest in funds through shares in infrastructure corporates around the globe.

The value of investment funds1 can fall as well as rise, and you may get back less than you invested.


ISIN
Fund
Risk profile
Issuance
Fees2
Minimum contribution
Fact sheet/Subscribe
LU0955011506
MORGAN STANLEY INVESTMENT FUNDS GLOBAL QUALITY "A" (EURHDG) ACC
Advanced
EUR
1,60%
1000 €
See factsheet Purchase
LU1295551144
CAPITAL GROUP NEW PERSPECTIVE "B" (EUR) ACC
Medium/High
EUR
1,50%
1000 €
See factsheet Purchase