The investment process aims to identify structural or fundamental shifts in economies, sectors and markets that result in strong returns for companies that benefit from these changes. As investors are reluctant to recognise fundamental turning points, markets struggle to price the long duration returns that structural change can drive. Change also leads to uncertainty, which is mispriced due to risk aversion.
Structural changes are typically driven by the progress of the economic cycle, the development of industrial cycles, policy changes, mergers, acquisitions or the emergence of new and disruptive technologies. This investment process is designed to capture the excess returns generated by identifying structural change early and estimating the likely magnitude of its impact.