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Using a thematic approach in model portfolios

We talk to Ben Gilbert, lead model portfolio manager at Sarasin and Partners.

Q1: What is unique about Sarasin’s investment philosophy and approach?

Ben Gilbert: Our investment philosophy and approach have been developed and embedded over a long period of time, there are three things which differentiate us:

Firstly, we are global investors. We look for the best investment ideas from around the globe without any parochial bias towards the UK.

Secondly, we are thematic investors, looking to capitalise on long term economic trends. Put simply, we try to skew clients’ portfolios towards those areas that we see as benefitting and we avoid the areas that we think are of concern.

Finally, we embed responsible stewardship principles – or ESG – at the core of our investment philosophy.

Q2: Can you expand on what you mean by ‘Thematic’ investing and how it actually impacts Sarasin’s Model Portfolios?

Ben Gilbert: Investment management is fundamentally about making prudent investment decisions in the face of an uncertain future. We believe thinking thematically gives us a great toolset to do exactly that for our clients.
We’ve identified five long term themes that we see as potentially investable. These are:

  • Digitalisation: the growing interconnectivity of our real lives with
    our digital lives.
  •  Automation in manufacturing and in all sorts of processes.
  • Evolving consumption. This is not just about the rise of a middle class in emerging markets, but also a change in the way we’re all consuming. We’re moving from simply consuming ‘things’ to consuming experiences too.
  • Climate change. We see net-zero as an absolutely crucial pathway for us. We’re going to have to decarbonise the world economy with profound impacts for companies, both good and bad
  • Ageing. This is a fundamental theme and very well evidenced. It’s going to have impacts for companies that stand to benefit from providing services and products to meet their demands.

How does our thematic approach impact the model portfolios? It’s affects every area, right through from strategic neutral asset allocations which are set in line with our long-term views of the world, to our tactical investment decision making and then to our instrument selection to express those views.

There are two things we need to get right as investment managers.

The first is the long-term strategic asset allocation, and our asset allocation decision making. This is always informed by our investment strategy group and our long-term thematic investment process.

Secondly, when it comes to instrument selection, we also use our thematic process at the core of our models to give clients good exposure to our thinking. We also use it to search for opportunities and threats in some of the external managers that we invest with.

In this way, it underpins our approach to managing the model portfolio service on a day to day basis.

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