14 MARKET VIEW
Stable equities offer investors the security and stability to weather any storm.
“Alphabet has enjoyed strong earnings growth for more than a decade – driven by its leading positions in Google Search, Maps, mobile operating systems, consumer content and advertising,” Vorm says. The two portfolio managers are convinced that the company’s sales are not overly economically sensitive – with secular growth being driven by continued mobile and video usage, Google Play activity and the expansion of the connected device. “As you can imagine, brands such as Google Search, the Android operating system and YouTube also enjoy strong pricing power,” says Vorm. “With strong expense dis- cipline, Alphabet’s sales growth translates into earn- ings growth – while its balance sheet is robust, with no debt and a highreturn on capital. As for its valu- ation, Alphabet is attractive in both absolute terms and relative to the market, especially considering its consistent earnings growth and strong balance sheet. While the company has not been immune to the pressures faced by the wider tech sector in 2022, its long-term potential has not diminished.” A new dawn for equities For the first time in almost 15 years, equity markets can no longer rely on the tailwinds of historically low interest rates and unprecedented monetary support. While most investors will still seek an exposure to equity markets, it is understandable if there is an increased desire to reduce risk. “The economic back- drop is undeniably cloudier than the environment we have been accustomed to over the past decade or more,” says Vorm. “If we are to encounter a period of elevated turbulence, we are convinced the market will increasingly appreciate stable business models, due to the strong capital preservation characteristics. In addition, our stable universe is in a better position to withstand today’s historic inflationary pressures, especially in the face of expected prolonged eco nomic weakness.”
Once Vorm and Næss have identified an appealing opportunity, there is one final piece of the puzzle: valuation. “Valuation has a key role in our portfolio construction process – as a stable company is not automatically a stable share,” Næss expresses. “Our stable companies need to be trading on fundamental- ly attractive valuations, as the market environment in 2022 has clearly displayed how much added volatility is associated with stocks at elevated prices. By avoi- ding companies with unrealistic valuations and focus- ing on high-quality companies that are typically fly- ing under the radar, our portfolio has proven to be better placed to withstand sentiment-driven market turbulence.” 2 Exhibit A for Alphabet At company level, even though the technology sector has typically been associated with the more turbulent high-growth segment of the market, Vorm and Næss have identified a number of resilient leaders within the space. For example, the duo is optimistic on the long-term prospects of Alphabet, the owner of Google.
Nordea 1 – Global Stable Equity Fund
Claus Vorm and Robert Næss
Manager
EUR
Base currency
LU0112467450 (BP-EUR) LU0097890064 (BI-EUR)
ISIN
02.01.2006 (BP-EUR, BI-EUR)
Launch date
2 The performance represented is historical; past performance is not a reliable indicator of future results and investors may not recover the full amount in- vested. The value of your investment can go up and down, and you could lose some or all of your invested money.
nordic friends
Made with FlippingBook Learn more on our blog