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Disruptive Influences

One of the key criteria in our equity manager selection is their ability and knowledge of disruptors and potential disruptors to existing companies. To us this is crucial to effective active equity management and it doesn’t just apply to thematic strategies, it pervades all of our equity managers.
As a reminder, we prefer managers who are index-agnostic, conviction investors not burdened by being too big and in being so, like ourselves, placing the investor above the shareholder.
To illustrate why this is important, you might reflect that around ten years ago, the major mobile phone manufacturers were Nokia and Blackberry. Where are they now?  They were also noticeable constituents of global equity indices.  Today their places have been assumed by Apple and Samsung, also significant index contributors.
The world can change drastically in ten years as the following piece on the US retail market from the Wall Street Journal demonstrates.
17-02-16 Disruptive Influences
While these numbers apply to the US retail market, it isn’t too much of a stretch to apply it to UK retail.
Incumbents can fall from grace quickly and within a decade be much less significant or gone. Active managers must be conscious of the challengers to existing businesses – ours are.

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