Taking the long-term view

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It’s easy to get caught up in short-term noise, but Investment Director David Polak from Capital Group says they look past this to focus on the long term. When the noise does overwhelm the market and stocks fall a long way, this can offer opportunities to potentially invest in great companies with long-term growth prospects.

“We invest in management, their vision, and their ability to execute.”

Key points:

  • One such opportunity is Amazon, which the New Perspective strategy first invested in back in 2006
  • Beyond its dominant ecommerce platform, Amazon is also one of the top two players in cloud computing through its Amazon Web Services subsidiary.
  • Amazon continues to invest in new services such as Alexa and Prime Video.

The company has a pervasive focus on providing an excellent experience for customers.

Gain insight into Capital Group's history, philosophy, people, and unique approach to investment management - The Capital System - by exploring Capital Group in more detail.

Transcript

Key ingredients of long-term investing

We have focused over the 45 years in the fund, really, on bottom up investing. In other words, looking at companies and companies we think are going to be good long-term investments.

We try to focus on the long-term, we pay our investment professionals to really look at companies in which we think are going to be great investments in five, eight, 10 years' time, not to get caught in the short-term noise.

And so that means that sometimes when the noise does overwhelm the market, we can see opportunity because stocks may come down a long way, which will give us an opportunity to invest in really good companies with long-term growth prospects.

One company that fits that profile

We think the long-term for Amazon continues to be pretty rosy. We first invested in the company in 2006 and one of the premises for the investment thesis was here was a company, from the very top down, that was focused on providing an excellent experience for their customers. Not just a convenient experience, an excellent experience. And that has pervaded everything they have done.

And so when we look at them today, they have created a business called Amazon Web Services, which is one of two firms that dominates provision of cloud services. That is a very large market that they are really just scraping at the moment.

Electronic retailing still has a long way to go. And they're creating new services, things like Alexa, things like Prime Video that we think have tremendous long-term growth opportunities.

So we can see Amazon continuing to grow their existing businesses, their relatively new businesses and in some cases, businesses they haven't even thought of. Because as long-term investors, one of the things we invest in is management, their vision and their ability to execute.

So we can be confident that the team at Amazon are actually going to create new opportunities. And that's why we're very happy to give them the capital to put to work in those things.

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The fund referred to is the American Funds New Perspective Fund, which is not available to investors outside the United States of America. Its launch on 31 March 1973 marked the start of the Capital Group New Perspective strategy. Capital Group New Perspective Fund (AU), which is registered for sale in Australia, was launched on 20 November 2015. It has the same investment strategy as the American Funds New Perspective Fund.

Please read the offering documents for further details before investing, including the risk factors.

This information below is issued by Capital Group Investment Management Limited (ABN 73 164 174 501), a company regulated by the Australian Securities and Investments Commission. Capital Group Investment Management Limited is a member of Capital Group.

Risk factors you should consider before investing:

The value of shares and income from them can go down as well as up, and you may lose some or all of your initial investment. If past results are shown, such figures are not predictive of future results.

Risk factors that may influence the value of an investment in the Funds include, but are not limited to, (i) increased risks of emerging markets, (ii) risk of decline in the price of equities and bonds in response to certain events directly affecting the companies whose securities are owned by the Fund as well as general economic conditions; overall market changes; political, social or economic instability; and currency fluctuations, (iii) interest rate risk as the market value of bonds generally vary inversely with the level of interest rates, (iv) credit risk as the creditworthiness of the Fund’s investment can impact the investment’s ability to meet its obligations, and (v) derivatives risks.

Other important information

The fund(s) is (are) offered only by the Product Disclosure Statement (PDS) and Information Incorporated by Reference. These documents, together with the latest Annual Report and any documents relevant to local legislation, contain more complete information about the fund(s), including relevant risks, charges and expenses, and should be read carefully before investing. However, these documents and other information relating to the fund(s) will not be distributed to persons in any country where such distribution would be contrary to law or regulation. They can be accessed online at www.thecapitalgroup.com.au.

The information provided is of a general nature and does not take into account your objectives, financial situation or needs. Before acting on any of the information you should consider its appropriateness, having regard to your own objectives, financial situation and needs.

While Capital Group uses reasonable efforts to obtain information from sources which it believes to be reliable, Capital Group makes no representation or warranty as to the accuracy, reliability or completeness of the information. This communication is neither an offer nor a solicitation to buy or sell any securities. It is not intended to be comprehensive or to provide investment, tax or other advice.

© 2018 Capital Group. All rights reserved.


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