Trustnet Magazine 58 January 2020 | Page 60

In the back [ STOCKPICKER ] 60 / 61 Higher-quality companies that aim to grow sustainably should outperform over the long term due to their robust cash flows, focus on improving shareholder returns and increasing franchise value BMO Responsible Global Equity’s Jamie Jenkins names three stocks set to benefit from the increased investment focus on contributing to a more sustainable global economy Keeping it up regularly and deliver better risk- adjusted returns. We believe that higher-quality companies that aim to grow sustainably should outperform over the long term due to their robust cash flows, focus on improving shareholder returns and increasing franchise value. These companies should also be more resilient in the face of persistent economic and geopolitical volatility, due to their long-term strategic horizons. T here is a growing recognition that looking at the world through a sustainable lens can lead to better financial outcomes for investors. In our experience, companies that have a proactive approach to managing environmental, social and governance issues, in terms of risks and opportunities, tend to achieve their strategic targets more customers reduce water losses, optimise water- system assets, address We live on a planet scarcity issues and help to where we have too much prevent and/or quickly re- water where we do not spond to sewer and storm want it and not enough water overflows. Recent where it is required. Xy- acquisitions have focused lem is a US-based global on smart technologies that water technology group will be central to driving that provides products efficiency and reducing and services to help its water leakage. TRUSTNET HDFC Bank is India’s second-largest private bank. Demographics should continue to drive Indian GDP growth: more than 45 per cent of the population is younger than 25, a subset that should enter the banking system as they become workers and earners. HDFC is using its status as a relative newcomer to become the most tech- nology-focused lender in India and, unlike many of its competitors, has lit- tle balance-sheet stress. An estimated unbanked population of 200 million should allow HDFC to ac- celerate access to finance. tions necessitate higher yields. Kubota dominates Kubota is one of the Asian rice farming and has world’s largest agricul- a strong franchise in small- tural and small-scale con- scale tractors, mini-con- struction equipment man- struction equipment and ufacturers. Based in Japan, recreational vehicles in the it represents a play on the US. It recently used weak- mechanisation of farming ness in the arable cycle to in emerging markets where broaden its developed mar- economic expansion and ket offering to larger-scale ballooning urban popula- tractors and equipment. trustnet.com