Three questions about...Echiquier World Next Leaders
The hallmark of La Financière de l’Échiquier (LFDE) is its culture of innovation. That’s especially true for Echiquier World Next Leaders1, a multi-thematic fund that constantly weighs the major structural trends that will shape the future.
What sets Echiquier World Next Leaders apart from the other multi-thematic funds?
Our fund management team constantly analyses the major structural trends that are shaping our future. We’re particularly interested in the specific features of companies that are helping develop these megatrends – in their capacity to generate growth and mobilise innovation. Today, the fund is invested in about ten thematic areas, including new lifestyles, e-commerce, financial disruptors, healthcare 2.0, wellness, artificial intelligence, and renewable energy.
We’re taking a unique “GAFAM-free” position and Echiquier World Next Leaders is focusing on medium- sized companies. We’re mainly investing in companies with market capitalisations of €1-20 billion. Going by this capitalisation means we can move away from the economic behemoths we know all too well, but still avoid small companies that have reduced cash flow or are just getting off the ground. The companies in the portfolio also have very strong growth forecasts, at least 12% per year over the next three years. Today, with the quickening pace of these future trends, the fund’s growth as measured by the expected change in revenue comes to over 30% per year2.
Our highly selective stock picking is based on EUR rigorous internal research that includes management team meetings and ESG analysis3 of the stocks. It is supported by dynamic portfolio management that garnered us a significant performance of +91.8% for 2020 vs. +6.7% for the benchmark, the MSCI ACWI NR EUR, and cumulative performance of +152.2% over three years vs. +30.8% for the benchmark4.
How have you tackled the crisis triggered by Covid-19?
We consider that Echiquier World Next Leaders was very well-positioned to face this crisis. In fact, even before it began, the fund was exposed to telemedicine, the cloud, e-commerce, digital payments, and cybersecurity. These are key issues for companies and governments that are becoming increasingly digital, a trend that has picked up speed since last March. Because these new, primarily digital tools are so simple and powerful, they’ve really boomed with consumers, companies, and institutions, and dramatically accelerated demand for the products and services of the companies in the portfolio, across all the thematic areas to which the fund is exposed. During the year, we built up some of these themes, such as cybersecurity, with leaders like OKTA and CLOUDFLARE5, in addition to renewable energy, in light of public investments made in green energy, which have been boosted by the stimulus plans.
What is the outlook for 2021?
We think the outlook for our strategy is still exciting. The pace of innovation is not letting up, and the companies we’re invested in are coming out of the crisis even stronger. Demand for their products and services is accelerating, and we think it will be tough to go back on the changes in consumer behaviours after having lived through 2020. That leads us to believe that the “back to normal” promised by mass vaccination will not be a return to the past, but the beginning of a new chapter. The fund’s flexibility will give us a positioning on promising new thematic areas. And finally, our search to identify tomorrow’s innovative leaders goes on, with the belief that the best is yet to come!
1 The Fund is primarily exposed to the risk of capital loss, equity risk, currency risk, and small- and mid-cap investment risk.
2 These constraints are not in the prospectus, so they may change over time.
3 Environmental, Social and Governance analysis is not the same thing as a constraint on selectivity.
4 Figures as of 31 December 2020. Past performance is not an indication of future performance. Over the last 5 years: +193.9% for the fund vs. +58.3% for the benchmark.
5 These stocks are given as examples but are not guaranteed to remain in the portfolio.
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