The past few years have brought an abrupt turnaround in the march of globalisation. Rising nationalism, tariffs and trade barriers, plus the impact of the pandemic on global supply chains, have brought shifts in global trading relationships.
However, Steven Smith, investment director at Capital Group, argues that globalisation is not dead - just different. Indeed, global trade is no longer only about the flow of physical goods around the world. Increasingly it is about digital transactions online.
"It's about services," says Smith. "It's about intangible flows of data and information flowing around the world. Companies are adapting, but they remain global in terms of their production facilities and customer bases."
Capital Group New Perspective strategy has a focus on investing in multinationals and seeks to capture changes in global trade, so it has a relationship with globalisation. However, its investment approach is not dictated by identifying top-down trends.
Instead, the portfolio's composition reflects what emerges from global, fundamental research. Digital transformation and disruption, for example, has been a strong theme but is derived from analysing the activities of individual companies.
"What we're not doing is going into a dark room at the start of a decade and trying to come up with the next five, six, seven long-term secular trends and structural changes in the global economy," says Smith. "The themes are organically derived from the bottom up."
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