Actual investors look at the big picture. Not just the small print.

In the long term, the highest-returning companies are usually those that meet the biggest unsolved challenges or best replace old solutions with new and improved approaches.

The bigger the scope for progress, the better the opportunity. As new technologies and business models are created, we start by considering what’s becoming possible.
Such companies aren’t found by mechanically looking at every company in the market. Our research is guided by what we learn from leading academics, scientists, and inspirational business leaders who know more than we do in their areas of expertise.

Big opportunities don’t necessarily translate into great investments. It takes ambitious and aligned management, supportive long-term shareholders and a relentless focus on business execution to capture success. Many companies don’t have what it takes. That’s why we spend so much time and effort getting to know the individuals who make the daily decisions that drive progress.

We have more confidence in predicting real-world progress over 10 years than stock market performance in the next quarter. Change is inevitable and often foreseeable, but it takes patience on the part of investors and adaptability on the part of companies to capture the opportunities.

We must look through the speculative ups and downs of share prices, focusing instead on how well a business is investing to grow future revenue and profitability. The companies in our portfolios typically invest around four times more than average in capital expenditure and research. This is what underpins the wonder of long-term compound growth that can generate outstanding long-term returns for investors.

What big opportunities are we thinking about for the next 10 years?

This is a time of incredible technological change. We are at the beginning of a huge shift in how society approaches healthcare as our understanding of genes, proteins and biological processes improves, and is combined with huge processing power and AI. With an ageing population and low birth rates in many countries, spiralling healthcare costs need to be tamed. The scope for disruption is vast, and we are already seeing everything from tailored medicines to robotic surgery taking costs out of the system.

Financial services – particularly banking – is being turned upside down by a new generation of seamless apps offering multiple functionalities at much lower cost. No one needs to pay huge spreads to obtain foreign currency any more. Digital payment services enable seamless and inexpensive transactions anytime, anywhere. In emerging parts of the world, banking services are now within the reach of many for whom they have simply been too expensive until now. The sprawling and costly infrastructure of the traditional banks and savings providers is under serious pressure and there is a massive profit pool to be disrupted.

The need to reduce carbon emissions is well known, but the green electrification of the global economy is still in its early days. Some implications are obvious – the need for many more solar panels and wind turbines, and the roll-out of electric vehicles. Others are less obvious: best-in-class copper suppliers and high-voltage cable producers, manufacturers of the software and hardware that enables a multipolar grid and domestic producers of rare earth materials in a world of increased tariffs.

From AI efficiency-boosting to road repairs

The adoption of AI may be right in the middle of its hype phase, but it will change society in ways that we don’t yet know. The initial winners are well known – those that provide the chips best suited to AI learning and inference, and those that own the datasets from which they learn. But the ramifications are much deeper. The potential for efficiency gains in knowledge sourcing and administration are vast, and we are seeing specific applications in everything from drug discovery and testing, to crop spraying, to autonomous drone deliveries.

Some opportunities are less headline-generating. Many western countries have chronically underinvested in their infrastructure for decades and we are seeing the results of that in crumbling bridges, closed roads, water shortages and failing flood defences. The costs of this are escalating rapidly so there has to be a rebuild. Companies that can best meet these hard infrastructure requirements have decades of opportunity ahead.

Opportunities abound for those willing to take a step back and look more widely.