Advisers flagged on shifting focus to long-term wealth thematics for current market climate

Head of savings and investments for Zurich Investments Matthew Drennan said advisers are operating in an environment of seismic change, as profound transformations continue to “disrupt” and shape our global economy. 

“Key structural drivers for the next decade, identified through conversations with companies themselves on how they are allocating capital, include technology, geopolitics, monetary policy and sustainability,” Mr Drennan said.

“Clients are naturally seeking answers, especially with respect to accessing long-term investment opportunities that take these structural changes into account.

“The combined impact of digital, environmental, social and regulatory disruption has, for example, added layers of additional risk and opportunity. Advisers operate at the forefront of decision-making on behalf of clients as they navigate these shifts.”

Mr Drennan pointed to the thematic managed investment approach pioneered for Australian advisers over two decades ago as an example of better managing risk with upside exposure to these emerging trends. 

The original diversified Lazard Global Thematic strategy launched in October 2003 and Zurich Investments partnered with Lazard in November 2003 to bring the strategy to Australian advisers and investors. 

The diversified strategy, the Zurich Investments Global Thematic Share Fund, combines return opportunities with risk mitigation to target strong risk-adjusted returns. Invested across eight to 12 themes, the portfolio typically holds between 80–120 stocks. The concentrated strategy, the Zurich Investments Global Thematic Focus Fund, identifies what the team believe are the highest return opportunities of the next decade. Focused on just three to six themes, the portfolio holds between 35 and 55 stocks. 

Mr Drennan believes this evolving, multi-theme approach best represents the reality that the world is undergoing rapid and profound change and “we must stay ahead of these changes rather than assume comfortable constants”.

“The thematic strategy offers a differentiated investment approach with performance outcomes having consistently exhibited lower levels of volatility than the benchmark,” he said.

“The strategy also has a fully integrated approach to sustainability, including theme alignment with the UN’s Sustainability Development Goals and a proprietary sustainability framework for stock selection.

“This is a forward-looking, style-agnostic strategy that focuses on the long term to provide a third way for advisers beyond growth and value.”