Thematics Asset Management’s CIO and founding partner Karen Kharmandarian has laid out three of the main investment themes his firm is targeting.
Speaking to PA Adviser at the 2024 Natixis investment conference in Paris, Kharmandarian pointed to one theme which there is a widespread consensus on, and two that are slightly under the radar.
The first of the two lesser lights is safety. The word can mean many different things in different contexts of course. In investment terms, we are concerned with companies involved in digital and online safety, payment processing and food production.
Kharmandarian explained that maximising safety in these realms is becoming a major priority for individuals, companies and governments.
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He said Thematics AM fund managers target a range of companies engaged in everything from cyber security and payment processing, to more traditional areas of safety in food and transportation. Being able to access the theme in different sectors creates the possibility of profiting from a range of ‘engines of growth’, he added.
Examples of companies which Thematics AM holds to play this theme include Steris, Synopsys and Thermo Fisher Scientific.
The second of the pair of lower profile themes is water. The demand for clean, reliable water supplies only ever increases as the global population rises, and there are a range of companies that serve this need directly.
Kharmandarian explained that companies making water delivery more efficient through improved processes and infrastructure are highly sought after. Scarcity created by droughts can add to this need, while the management and response to floods is an increasingly important area.
Dealing with water pollution is another growth avenue he pointed to. Companies that fit the water theme include Core & Main Inc, Veolia Environment and Xylem.
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Thirdly, it will come as little surprise to most that AI sits within the top themes Kharmandarian’s firm is tapping into. He sees it as a ‘multi-decade growth opportunity’. While generative AI delivered through large language models (LLMs) by the likes of Open AI and Google is taking most of the spotlight, Kharmandarian pointed to robotics as an exciting area within the AI theme.
There is a stream of new developments coming through in robotics, he explained, with the latest generation of robots embedding more and more layer of technology. Navigation systems, perceptions systems and cognitive system are laying the groundwork for robots to do many new tasks, particularly in industrial and manufacturing settings.
Notably, robotics is not as US dominated as generative AI. While American companies such as Altair Engineering Inc and Ansys feature in the portfolios Kharmandarian oversees as CIO, so do Japanese companies including Daifuku and Fanuc, as well as France’s Dassault Systemes and German industrial giant Siemens.
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