“One stock in, one stock out”; this exclusive club sticks to 30

Spanning world wars: Bo Knudsen unpacks C WorldWide Asset Management's strategy for sustained growth through focused portfolios and thematic insights

“One stock in, one stock out”; this exclusive club sticks to 30

This article was produced in partnership with Canada Life Investment Management

“About half of our portfolio companies have survived two world wars,” shares CEO and portfolio manager Bo Knudsen, “The average lifespan of the companies in our portfolio is 111 years.”

C WorldWide Asset Management's (CWW) investment strategy is marked by a disciplined approach and a portfolio that benefits from the resilience of companies demonstrating sustainable growth. Known for its disciplined investment philosophy, CWW limits their strategy to investing in a maximum of 30 stocks, fostering a “constant competition for capital.” Access CWW's strategy through the International Concentrated Equity segregated fund, and Canada Life International Concentrated Equity Fund mutual fund. CWW provides investors access to a world of opportunities outside North America.

By adhering to a “one stock in, one stock out” philosophy, CWW curates a high-conviction portfolio, helping ensure each holding contributes meaningfully to the portfolio's long-term performance.

CWW’s strategy is deeply informed by the belief that companies capable of navigating through centuries — witnessing economic changes, technological advancements, and global conflicts —offer potential for sustained growth.

A thematic approach to top-down analysis

The strategy, grounded in a thematic approach enables them to identify long-term growth opportunities in international markets. Using a thematic approach rather than macroeconomic trends allow for a more stable investment horizon, with current focuses including the reshoring of manufacturing and the implications of geopolitical shifts. By understanding macroeconomic forces, demographic changes, and technological advancements, CWW positions its portfolio to benefit from the waves of change shaping the global economy.

Knudsen says, “Thematic tailwinds, while not overly complex, represent the foundational shifts driving ongoing change, aligning well with our investment horizon and enhancing our process by encouraging a longer-term perspective. For instance, one significant theme influencing the global landscape is geopolitics, particularly the trend of reshoring.

“This massive shift, driven by companies seeking to diversify their production away from China to various other geographies, is expected to have a lasting impact, potentially spanning decades. We believe this represents a more reliable basis for investment strategy than short-term economic indicators, as it's likely to shape the market for at least the next decade.”

Structural growth themes guide the research and stock selection process

Reshoring leads to significant shifts in investment themes, directing CWW’s focus toward companies that facilitate this transition. For instance, the construction of modern factories in Western countries necessitates extensive automation, positioning robot manufacturers advantageously.

This development underlines a broader trend where, beyond the vast U.S. market, leading automation companies from Sweden, Germany, and Japan emerge as global frontrunners.

Even the traditional rivalry between selecting Visa or MasterCard extends beyond a simple comparison of two leading payment companies. It shows the broader challenge of evaluating potential investments across diverse industries and geographies.

Adding to this complexity is the emergence of unconventional competitors, such as a Swedish engineering and automation firm or a Brazilian internet company. This underscores the need for portfolio managers to analyze the vastly different entities to find the most promising future return opportunities.

Looking at key stock picks, Knudsen highlights, “Our portfolio has components with nearly timeless products and services that deliver real value, such as Assa Abloy Group the world's largest locksmith company. The need for locksmiths has been constant, especially given that media news coverage further creates uncertainty, where secure living behind closed doors has become increasingly important.”

Assa Abloy AB, a Swedish conglomerate, specializes in a wide range of security products and services, including locks, doors, gates, and entrance automation.

Another key conviction Knudsen holds is in Japan, as the country is experiencing considerable benefits from reshoring efforts, complemented by encouraging changes in corporate governance pointing towards a positive direction.

A notable investment includes the premier company in the air conditioning and heat pump sector, Daikin Global. Daikin is recognized as the largest company within this industry.

Long-term growth and what sustainability means to CWW

Knudsen views sustainability as important for long-term value appreciation. The concept of sustainability means different things for different people. For example, Knudsen suggests, if a company contaminates the environment, it constitutes poor business practice.  

This is particularly true for long-term investors, for whom the repercussions of environmental pollution can eventually tarnish reputations, divert management's focus, and entail significant cleanup costs.

Knudsen underlines the importance of environmental responsibility and sustainable practices by corporations but also signals a move toward a more multipolar world where the consequences of neglecting environmental stewardship are increasingly recognized as critical to both corporate and global stability.

Knudsen concludes, “The issue of reshoring serves as a compelling example of the broader shifts we're observing. Historically, the global stage was dominated by a single ‘sheriff ’— a metaphor for a unipolar world. However, we are transitioning into a multipolar world, where multiple ‘sheriffs’ vie for influence. While integrating such complex changes into a spreadsheet may be challenging, our extensive experience enables us to distill these insights, guiding our investment strategy.”

Want to get more insights from C WorldWide Asset Management?

Canada Life Investment Management brings together leading investment managers to offer a relevant and diverse fund line-up that meets your client’s needs through today’s changing market dynamics. Registration opens April 2  for the Canada Life™ Portfolio Manager Connect Series, C WorldWide will be featured on our next call on May 14 at 11 a.m. ET.

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This interview is part of an ongoing series about Canada Life Investment Management’s approach to investing with its partners around the world. Previous stories discussed the bond market, value investing, fixed income, real assets and risk-managed portfolios.

The Canada Life Portfolio Manager Connect Series is for advisors only.

The views expressed in this commentary are those of this investment manager as at the date of publication and are subject to change without notice.  This commentary is presented only as a general source of information and is not intended as a solicitation to buy or sell specific investments, nor is it intended to provide tax or legal advice. 

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