According to Marriot, the income specialists, which aims to reduce the financial anxiety of retired investors by offering solutions for retirement, using an income-focused investment style which produces reliable and consistent monthly income, investors are currently dealing with a tough economic and investment environment.
Marriot spokesperson and Chief Investment Officer, Duggan Matthews, says by tapping into the trends of a rapidly growing consumer class in the developing world, an ageing first-world population and technology-enabled efficiency and productivity gains, investors will be best positioned for future growth.
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These three macro-trends hold significant opportunities for investors:
1. Rising incomes in the developing world
The GDP growth of many major emerging markets is increasingly being driven by household spending as they transition from investment-led to consumption-driven economies. Over the next five years, it is anticipated that incremental consumption growth in China and India will equate to a market about the size of Japan.
The annual consumption in emerging markets is expected to reach $30 trillion by 2025 while the consuming class is expected to rise from some two billion today to nearly four billion.
Consumers facing multinationals with meaningful footprints in the developing world will, therefore, benefit from what we believe to be a significant growth opportunity of the next decade.
2. Ageing populations in the first world
People born in the baby boomer generation – those born post World War II until the early 1960s – are reaching retirement age. By 2030, there will be a one-third increase in the number of people over the age of 60 in the developed world.
Baby boomers are also living longer – in some societies as much as three decades longer than they did a century ago. They have higher spending power and own more assets than any other generation.
In the US, boomers represent 44% of the population and in the next 5 years, they’re projected to hold 70% of US disposable income and buy 49% of total consumer-packaged goods. Healthcare spending by boomers is projected to rise by $1,4 trillion and they are currently responsible for 80% of all luxury travel spending.
Companies which target this generation’s consumption habits will have a ready-made market for their goods and services.
3. Technology-enabled efficiencies
Advancing technology presents investors with a major opportunity. Business is expected to benefit from long-term gains in efficiency and productivity as well as connectivity – termed the Fourth Industrial Revolution and the Internet of Things.
It has been predicted that by 2020 there will be over 26 billion connected devices – more than three connected devices per person on the planet. Data production will increase by approximately 44 times by 2020 and only 10 -15% of companies globally currently use data efficiently to optimise performance. The upside potential of this trend is significant.
Considering these three trends, Marriott has identified certain stocks which they believe investors should buy and hold for next decade.
Companies which own the world’s most sought-after consumer brands like P&G, Unilever, Reckitts Benkiser and Nestle own brands like Pampers, Dove, and Dettol with the demand for these products likely to increase substantially in the years ahead considering the rapid growth of the consuming class.
World-leading pharmaceutical companies such as Johnson & Johnson, Pfizer, GlaxoSmithKline and Sanofi are amongst the biggest pharmaceutical companies in the world and own a large percentage of the globe’s essential medicines ranging from vaccines to cancer treatments.
The world’s finest manufacturers. These are companies like GE and Honeywell which are leading the way when it comes to connecting equipment to the internet and analysing data to optimise performance.