‘We feel that the environment is changing in a pretty meaningful manner’.
That’s why Rajiv Jain, Citywire + rated manager and chief investment officer of GQG Partners, is putting consistent over strong recent outperformers at the heart of his current thinking.
Speaking as part of a wider interview, which included a deep-dive into the rapid growth of his boutique since 2016, Jain discussed recent market volatility, which was largely driven by President Trump’s large-scale tariff announcement.
While an element of this has dissipated over the past month, Jain said it acted as an important lesson for investors, especially those such as himself, who cover both global and emerging market equities.
‘I have seen the twin deficit scenario that the US is facing [government revenues and export revenues] and how that feeds into the emerging markets,’ he said. ‘But the US is the US and is a reserve currency, so we are conscious of how it will play out.
‘If you look at earnings expectations, we are, broadly speaking, fairly elevated and only a few percentage points off historic peaks. We are coming at this from a period of 20%-plus returns for the past few years, so we feel that it makes sense to have a lower growth expectation.
‘That said, lower growth expectations on one hand but focusing on dependability of earnings on the other. So, we’re leaning in favour of certainty of earnings, rather than the growth rate itself, which is leading investment thinking in other areas.’
Jain highlighted how capital expenditure – capex – is an important marker, and he pointed to how Southern European utilities companies have undertaken a significant uptake here as a result of power crises and energy security concerns. ‘This is a positive for utilities,’ he added.
Utilities have proven an attractive outside bet for Jain, which is an overweight across his equity portfolios alongside energy and communications.
Jain was also asked about his view on artificial intelligence (AI) and whether he is managing to separate hype from investible ideas for his portfolios. ‘So, while we are still longer term, structurally bullish on AI as theme, we do feel the investment opportunity seems a little more limited, simply because valuations and growth rates may taper off.
‘However, there are companies that are beneficiaries of that, but it’s too early to predict who would be the real winners, so we are blocking out and tackling markets in terms of individual businesses and valuations, for example. AI as a theme is likely to be slightly tempered for the foreseeable future until new winners emerge.’
