Low debt, dividends, creativity crucial: Threadneedle
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Philippa Yelland is a journalist with InvestorDaily, a Morningstar publication.
Innovation is now just as important as a healthy balance sheet and low or no debt for global equities investor Threadneedle Investments.
"In an environment where growth is challenged, if we can find sectors where companies are continuing to grow, those companies should be highly valued," Threadneedle Investments head of global equities William Davies said.
So, the Threadneedle Global Equity Fund  looked for companies that were paying dividends, had low or no debt, were investing in themselves through share buybacks and - almost most importantly - were innovative.
"Innovation is driving growth in a no-growth world," Davies said.
In the shale oil/gas market, the "rash of investment in this sector" was now moving from the first stage - of equipment manufacturers - to the second stage of the industries that would benefit from lower-cost gas for manufacturing, he said.
Another driver of growth in a no-growth world would be the rapid smartphone adoption in developed and emerging markets (DMs and EMs).
In 2004, about 20 million smartphones were shipped to DMs and EMs. The estimated figure for 2013 is almost 800 million, with more than half of those going to emerging markets.
This explosion, combined with "the revolution in the pattern of the e-commerce spend" and in online advertising, Davies said, was encouraging Threadneedle to buy stock in QualComm, Samsung, Apple and eBay.
The downward trend in the fortunes of Nokia and Research In Motion - despite their original successes - spurred Threadneedle to be always asking: "So, what do we need? We need innovation to be driving growth," Davies said.
For example, the release of the iPhone 5, which was bigger and lighter than the iPhone 4, might or might not have been a "game-changer", he said, "but its use of 4G means it will spur investments in 4G".