Most companies can muster some kind of sustainability story. However, the clarity, prominence and measurability of targets is key to getting investor buy-in. Elite portfolio manager (PM) Hugh Cuthbert thinks more could be done by British supermarket giant Tesco.
Citywire AAA-rated Hugh Cuthbert, PM of the SVM All Europe SRI fund, says: ‘[It’s] doing OK, could be doing much better, and needs to be monitored and pushed by shareholders’.
Tesco has gone through a multi-year recovery following an accounting scandal in 2014. The hard graft has made it one of the 10 most popular UK stocks with the world’s best fund managers. Steadying the ship has also put the UK’s biggest supermarket chain in a better place to cope with soaring inflation and a cost-of-living crisis.
Despite some reservations from PMs, Tesco is working on several fronts to make its operations and those of its suppliers greener. This plays to Fix the Future’s new agriculture and food tech theme.
Asian spice
We have used our unique collective-conviction ranking methodology to find elite managers’ 10 favorite shares in Asia. A key way top investors are seeking to benefit from the region’s rapid economic growth is through banks.
Other domestic plays include China’s premier luxury drinks company Kweichow Moutai, gaming giant Tencent, and Indian conglomerate Reliance Industries. Two global leaders also feature in the top 10. These are fast-growing tech plays Taiwan Semiconductor Manufacturing and Infosys.
Gimme five!
Harvard Business School senior lecturer Randy Cohen has spent the past 15 years studying the performance of PMs’ highest conviction bets, which he views as indicative of their ‘best ideas’. His conclusions since he published his first paper in 2009 up to the latest update in 2021 have been consistent.
‘What you see when you look at the data is that after fund managers’ third, fourth or fifth best idea, everything starts to look pretty much like the market performance,’ says Cohen.
Other studies since Cohen first published his research also suggest fund manager skill is only consistently evident in top holdings. Fix the Future’s focus on the highest-conviction bets of the world’s best managers aims to tap into some of this magic while also illuminating the thinking and process of some of the world’s best investors.
Read More: Fix the Future: Asia’s top 10 stocks and how to find PMs’ best ideas