Andy Budden, investment director at Capital Group, shares his perspective on the current economic landscape and identifies key investment themes.
As global markets face uncertainty and inflation remains high, the question of whether there will be a hard or soft economic landing looms large. Andy Budden, investment director for equities at Capital Group, offers his insights on the matter. In a recent interview with CNBC Pro, Budden discusses his belief in a “Goldilocks” economy, characterized by moderate growth and inflation. He also shares his thoughts on dividend stocks, favored sectors, and emerging investment themes. With a focus on long-term value, Budden provides valuable insights for investors navigating today’s volatile markets.
Dividend Stocks: A Moderate Approach
Budden emphasizes the importance of investing in dividend stocks with moderate returns, ranging from 2% to 5%. He cautions against high-yielding stocks, as they often indicate underlying issues within the company. Instead, he advises seeking out companies that pay a moderate dividend, which suggests stability and a positive future outlook.
Favorite Sectors: Healthcare and Net Zero Carbon Emissions
Budden highlights healthcare as a key sector to watch, particularly due to the advancements in drug innovation. He specifically mentions the growing prominence of GLP-1 drugs, used to treat obesity and diabetes. Pharmaceutical giants Novo Nordisk and Eli Lilly are at the forefront of this development.
In addition, Budden identifies the transition towards achieving net zero carbon emissions by 2050 as an investment theme with significant potential. He believes that while reaching this goal may be challenging, numerous companies will emerge successful in facilitating the transition. Budden is particularly interested in the battery, hydrogen, electrical grid, and heating and air conditioning segments.
Changing World Order: Investment Opportunities
Budden acknowledges the changing world order, driven by rivalries between nations and the imposition of trade restrictions. Rather than viewing this as a negative development, he sees it as an investment opportunity. The shift towards onshoring and nearshoring, where businesses source products and staff closer to home, presents opportunities for various industries. Shipping companies and healthcare suppliers, for instance, stand to benefit from the resulting changes in supply chains.
Digital Disruption: The Rise of Artificial Intelligence
Another theme Budden highlights is digital disruption, specifically the impact of artificial intelligence (AI). He mentions Microsoft’s recent launch of its 365 Copilot feature, an AI supplement to core products. Alphabet, the parent company of Google, is also set to launch Bard, an AI-powered chat-based tool. While AI is still in its early stages, Budden predicts that it will have a substantial impact on the economy and individuals in the next decade.
Conclusion:
Amidst uncertainty in global markets, Andy Budden offers valuable insights for investors seeking stability and long-term growth. His belief in a Goldilocks economy, moderate dividend stocks, and investment themes such as healthcare innovation and the transition to net zero carbon emissions provide a roadmap for navigating the current economic landscape. Furthermore, his recognition of the changing world order and the rise of digital disruption underscores the importance of staying ahead of emerging trends. As investors adapt to the evolving market conditions, Budden’s insights serve as a guide for making informed investment decisions.
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