After a rocky start, global equity markets provided Australian investors with positive returns in 2016. The MSCI World Index (AUD) was up 9% driven by a strong post-election U.S. equity market. The S&P 500 (in AUD) rose 10.6 % and the ASX gained 11.8%. A number of Macrovue’s thematic portfolios handily out-performed these widely accepted benchmarks. Below are our five best.
1. Water Liquid Gold +23.7%
The best performing Vue in 2016 was Water Liquid Gold which gained 23.7%. This Vue is a play on the strong demand for water which is now an increasingly scarce resource and the underlying infrastructure that provides clean water. Significant performers held in this thematic portfolio include:
- Itron (+75.06%)
An American technology company that offers products and services on energy and water resource management including technology solutions related to smart grid, smart gas and smart water that measure and analyze electricity, gas and water consumption.
- SABESP (+91.3%)
A Brazilian company which provides water and sewage services to residential, commercial and industrial users in São Paulo, Brazil’s capital city and most of the municipalities in Sao Paulo State.
A specialty chemicals group based in Cologne, Germany that offers a whole range of innovative products that help to tap, safeguard, and inexpensively purify water — and to effectively reduce water wastage.
- Entegris (+36.03%)
Offers filtration products that purify process gases and fluids, as well as the ambient environment as well as liquid systems and components that dispense, control, or transport process fluids.
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2. Entertainment + 22.4 %
Our Entertainment Vue gained 22.4 %. This Vue is a concentrated investment in the global entertainment and media industry. Strong performances came from:
- Time Warner (+52.9%)
One of the world’s leading media and entertainment conglomerates with businesses in TV networks, film and TV entertainment.
- AMC (+44.6%)
A chain of movie theatres operated by AMC Entertainment Inc. and is now a majority-owned subsidiary of giant Chinese entertainment conglomerate Dalian Wanda Group.
- Eros International Media (+43.8%)
- An India based film entertainment company. It co-produces, acquires and distributes Indian language films in multiple formats worldwide. It is India’s #1 movie production studio.
- CBS (+37.5%)
Has operations that span virtually every field of media and entertainment in the U.S., including cable, publishing, radio, local TV, film, and interactive and socially responsible media.
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3. The Internet of Things +21.2%
The Internet of Things Vue was up 21.2%. This Vue gives investors exposure to companies creating products, devices and technologies for the Internet of Things eco-system. Contributors to outperformance included:
- InvenSense (+114%)
Primary business involves designing and manufacturing Micro Electro Mechanical System (MEMS) gyroscopes used for motion tracking devices in consumer electronics. The products have applications in smartphones, tablets, cameras and wearables. InvenSense is about to be acquired by Japanese electronics giant TDK for an acquisition price of USD13.00 per share (total acquisition price of USD 1.3 billion).
- STMicroelectronics (+73.52%)
A semiconductor manufacturing company focused on specifically providing chip based products and solutions to the Internet of Things and the automotive industry. It is Europe's largest semiconductor chip maker based on revenue.
- Texas Instruments (+37.2%)
A global analog and digital semiconductor IC (integrated circuit) design and manufacturing company. It is one of the few players in IoT which has a product portfolio that spans the entire value chain of the Internet of Things ( IoT).
- Microchip Technology (+27.5%)
A semiconductor company with a diverse product portfolio. Products include PIC (Peripheral Interface Controller) microcontrollers and PIC digital signal controllers. The recent acquisition of Atmel Corp (ATML-US) has transformed MCHP into a market leader in the microcontroller market (#3 in market share) with a wider product range in the IoT space.
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4. Clean Tech +20.2%
The Clean Tech Vue was up 20.2 % in 2016. The Vue holds companies that are instrumental in the adoption of cleaner and more sustainable technologies. Significant performers included:
- Itron (+75.07%)
(See Water Liquid Gold commentary)
- Nexans (+42.05% )
A French company which manufactures copper and optical fiber cable products for the infrastructure, industrial (particularly the shipbuilding, petroleum and aeronautical sectors) and construction markets.
- Lanxess (+41.3%)
(See Water Liquid Gold commentary)
- Ingersoll Rand (+39.2%)
A global manufacturer of a wide variety of industrial products and has a strong commitment to producing products that increase energy efficiency and reduce greenhouse gas emissions.
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5. Silver Haired Economy +19.17%
The Silver Haired Economy Vue appreciated 19.17%. The Vue focuses on companies benefiting from the large and growing population of retirees in developed countries. Contributors to this out-performance included:
- Australian based Primary Health Care (+80.8%)
A provider of services (medical centers, pathology, diagnostic imaging) to the domestic healthcare industry.
- Lincoln National Corp (34.91%)
Offers life insurance, annuities, and retirement plans for the U.S. market.
- Challenger Financial (+34.12%)
A Sydney, Australia-based provider of life insurance, annuities, and fund management products.
- Principal Financial Group (+33.2%)
A global financial services company, offering a wide range of products and services to the retirement and savings markets.
Investments and foreign exchange can go up as well as down and involve the risk of loss. Past performance is not an indication of future performance. If you have any doubts as to the suitability of these investments you should seek independent financial advice. See Benefits & Risks of Investing for further details.