Insurance and technology have been tipped as the growth industries for investors in the post-GFC recovery.
Chris McHugh (pictured), founder and senior portfolio manager of Turner Investment Partners, said that while personal insurance and technology were the stocks of the future, his firm was avoiding consumer staples, utilities and telecoms.
McHugh singled out insurer AIA, and technology names Apple Inc and Qualcomm. “We like the industry growth prospects in life, accident, and health insurance … due to growth potential in emerging markets such as Singapore, Thailand and Hong Kong,” he said.
Turner Investments, based in Berwyn, Pennsylvania, has a growth-style approach to the US$18 billion FUM which it has garnered in its 20-year existence.
McHugh is bullish on personal insurance in emerging markets for at least the next five years “because there’s not a lot of government provision”, and because AIA has been doing business for over 30 years through more than 300,000 agents in the Asia-Pacific region.
In the US, McHugh said the technology stocks exciting interest were Apple Inc and Qualcomm. “Apple Inc’s interim CEO, Tim Cook, has done an excellent job. He’s doing a phenomenal job, and he’d seem to be the natural successor to Jobs,” McHugh said.
Qualcomm was also a technology stock worth watching because “it’s sitting in the path of two significant trends: Smartphones, and tablets,” McHugh said.
The company was “in a very good position to share in those two very significant markets”, he said, because there were now more than 1.2 billion Smartphones with Qualcomm’s’ Snapdragon mobile processor embedded in them, and the tablet market – currently owned by Apple – had only Google’s Android as competition.
Turner Investments has two funds: global diversified and global concentrated. Both pay attention to the MSCI World Growth Index benchmark and have from zero to 15 per cent in emerging markets. While the first takes in 60 to 70 names, the second – as its name suggests – concentrates on 20 to 30 names and pays no attention to countries or sectors.
The urbane McHugh is bearish on utilities, telecoms, and some consumer staples because of where they are in the post-GFC recovery.
“Some consumer staples have slower growth at present because they’re more defensive and can’t pass on inflation pressures,” he said.