Martyn Jones

Learning the value of education

Martyn Jones

Twenty years on from Tony Blair’s famous ‘education, education, education’ speech, the role of this sector has arguably never been more important.

UN estimates show 103 million young people worldwide lack basic literacy skills, with more than 60% of this number women. Meanwhile, enrolment in primary education in developing countries has improved in recent years to reach 91% but 57 million children still remain out of school.

The UN’s Sustainable Development Goal (SDG) 4 focuses purely on education, with targets to increase enrolment rates, particularly for women and girls, and achieve universal standards of literacy and numeracy. Highlighting the overlapping nature of sustainable goals, education also plays a part in SDG 5 on Gender Equality, 8 on Decent Work and Economic Growth and 10 on Reduced Inequality.

Beyond its sustainable impact, education also makes a great deal of sense financially: UNESCO data state that every $1 invested in education yields $10 in economic returns, which are enviable figures relative to any other sector.

The global market is valued at nearly $5 trillion and given population estimates between now and 2050, particularly the rise of emerging middle classes with a high propensity to spend on education, we expect the sector will continue to grow at a high rate for decades to come.

We look for sub-sectors and companies that benefit from these trends and highlight universities, educational content publishers and education technology companies as ways to access this theme.

Our research into the education value chain has identified academic publishers as particularly attractive. A large growth driver for this industry comes from developing markets where the number of educational institutions and overall spending on resources is increasing significantly.

In China, for example, 8 million will graduate from the country’s universities in 2017, nearly 10 times higher than in 1997 and more than double the number graduating in the US. There is still significant growth potential: numbers from the OECD for 2015 show just 10% of China’s 25 to 64-year-olds with tertiary education, compared to a global average nearing 40%.

Our investments include RELX, a UK and Netherlands-listed company that produces journals, books, databases and tools for research and education. The company has a focus on science, technical and medical subjects and its best-known journals include The Cell, Gray’s Anatomy and The Lancet

RELX Group's Elsevier division publishes 16% of the world’s scientific articles and has a 28% share of high-quality research as measured by the Field-Weighted Citation Impact (FWCI) ratio. Offering the best academic journals is key for universities as they look to maintain their positions, so businesses like RELX can command high pricing power.

Disclaimer:

• This content contains information and analysis that is believed to be accurate at the date of publication but is subject to change without notice. Whilst care has been taken in compiling this content, no representation or warranty, express or implied, is made by Liontrust as to its accuracy or completeness. Some parts/sections of this content may been compiled from external sources. Whilst these sources are believed to be reliable, the information has not been independently verified and therefore no representation is made as to its accuracy or completeness. • It should not be copied, faxed, reproduced, divulged or distributed, in whole or in part, without the express written consent of Liontrust. • Past performance is not a guide to future performance. Do remember that the value of an investment and the income generated from them can fall as well as rise and is not guaranteed, therefore, you may not get back the amount originally invested and potentially risk total loss of capital. The issue of units/shares in Liontrust Funds may be subject to an initial charge, which will have an impact on the realisable value of the investment, particularly in the short term. Investments should always be considered as long term. • Any decision to invest should be always based on the final Prospectus and Key Investor Information Documents (KIIDs) and you should take independent legal advice if necessary. These documents contain important information which should be read before investing in any fund and they can be obtained, free of charge, here.

• Liontrust SF Absolute Growth Fund and Liontrust SF Global Growth Fund have holdings which are denominated in currencies other than sterling and may be affected by movements in exchange rates. Liontrust SF Absolute Growth Fund invest in emerging markets which may involve a higher element of risk due to less well regulated markets and political and economic instability. Consequently the value of an investment may rise or fall in line with the exchange rates. Liontrust UK Ethical Fund, Liontrust SF European Growth Fund and Liontrust SF UK Growth Fund invest geographically in a narrow range and have a concentrated portfolio of securities. There is an increased risk of volatility which may result in frequent rises and falls in the Fund’s share price.

Thursday, December 14, 2017, 12:34 PM