Third in a series of videos focused around quality investing themes, produced by Vontobel Asset Management’s Quality Growth Boutique, subadviser to the Virtus Vontobel Funds.
Only a narrow set of companies can surpass the majority. Matt Benkendorf, CIO of Vontobel’s Quality Growth Boutique, reveals the sectors and world regions where he and his team believe the next market-beating anomalies could be found in 2023.
In the U.S., we're still seeing continued opportunities in areas like consumer staples and healthcare – real sweet spots for us as quality investors. We've also been able to take advantage of the washout in the tech space, which has rightly punished the more speculative, lower-quality companies in that area, but it's also knocked down the valuations in some very high-quality U.S. tech companies.
Europe, as well, has been similar. Europe hasn't been spared from the volatility in markets and the drawdowns. And in Europe, in those sweet spots we invest, we've also been able to widen our opportunities in the portfolios, investing still in those sweet spots for us like staples, healthcare, tech.
The emerging markets...you've seen a real broad set of opportunities, particularly in China. As a quality investor in China, we're consistently in more consumer-oriented spaces. They've continued to be weak because of the COVID lockdowns. But as this COVID recovery continues to improve in China and across the broader wide Asian region, consumer-oriented businesses that are real great high-quality growth opportunities over the long term still are extremely cheap now.
But the emerging markets aren't just about China. You've seen tremendous opportunities in economic growth and actually an earlier COVID opening going on in areas like Vietnam, Thailand, Indonesia, India in particular. India's coming through a period currently of fairly strong economic growth, and the opportunity set for a quality investor in India is wide and deep. So we continue to have a lot of conviction in India as an investment space.
Indonesia, as I mentioned, is also a great place for us as high-quality investors. It's a bit of a narrow opportunity relative to India and China, but there are still some great, really high-quality long-term growth companies in Indonesia, and it plays a critical role in the Asian economy.
Also, emerging markets just aren't about Asia either, though. If you look across into the Western Hemisphere, Latin America also presents a lot of great emerging markets opportunities. Brazil has come through a very important election period, and Brazil as an economy continues to be strong. In Brazil, you see really great high-quality opportunities there in a variety of sectors. We see it in consumer-oriented areas, smaller technology areas. Brazil itself offers great, high-quality, unique businesses for us as a growth investor.
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