The Great Consumer Revolution

We’re excited to have set a target launch date for the upcoming Lakehouse Global Growth Fund that we’re keen to share. More on that shortly.

But first I want to make a quick interjection about one last global opportunity that has our team hustling to turn over rocks: The rise and evolution of the global consumer.

Australia is The Lucky Country, but it’s not the only lucky country. The Brookings Institute estimates that an average of 160 million people will join the global middle class over each of the next five years.

The scale is hard to wrap one’s head around but, if it helps, that’s like adding 6 new Australia’s every year full of people who will soon be lucky enough to have reached the middle class.

The surging middle class opens up a raft of opportunities, and brands come in many shapes and sizes, but the angle that most piques our interest is strong consumer brands with loyal customers who make using that product a daily ritual. Picture Colgate, Coca-Cola, or even Vegemite.

Such trusted brands have a lot going for them. They command premium pricing, shelf space from retailers, and can oftentimes count on years or even decades of loyalty from customers. Colgate’s parent company, for example, has increased its dividend for 54 consecutive years.

The potential to combine a swelling addressable market with sticky products is what makes this space so compelling to us. It also helps that the pond of ideas is well stocked with big fish. Australia might only have 13 listed consumer staples companies that command $1 billion valuations, according to S&P Capital IQ, but there are another 651 listed on other global exchanges.

Odds are you haven’t heard of many of these brands or companies even though they might be leaders in their home markets. Take Marico, an Indian consumer products business, which is just one of many businesses that have been put on our radar by the newest addition to our team, Pooja Shirangi.

Marico is the longtime leader of the Indian market for coconut hair oil with 58% market share. I can’t say that I’ve used the product myself — it’s been years since I even had hair — but it’s a widely used product in one of the world’s most populous countries. I also know good numbers when I see them, and the combination of brand loyalty and a growing market has helped to power Marico’s earnings per share to grow at an annualised rate of around 19% over the past 15 years.

Whether we end up buying shares of Marico for the fund is an open question because we evaluate opportunities on a range of factors. Also, while Marico is based in India and the fund will be able to invest in emerging markets, the plan is to put the bulk of the fund’s investments in developed markets.

But suffice to say you get the idea. It’s a big world with a wide range of opportunities, and we’re excited to get after them.

And the planned launch date is…

We and the Lakehouse Global Growth Fund’s responsible entity, One Managed Investment Funds Ltd., are pleased to say that we expect to issue the fund’s product disclosure statement (PDS) to Australian investors on 9 November 2017. And, as for you Kiwis, we also expect to offer the fund in New Zealand shortly thereafter (stay tuned).

We’ll send out links to the PDS and an application for the fund once they are available. Investors considering the fund should read, consider and seek their own advice about the fund’s PDS before deciding to invest: it’s the fund’s official offer document and will contain details on the investment strategy, objectives, risks, fees, and more.

Thank you again for your time, interest, and trust.

Joe Signature
Joe Magyer, CFA
Chief Investment Officer
Lakehouse Capital

P.S: Lots of you took us up on our recent offer to email us questions at [email protected] about the upcoming Lakehouse Global Growth Fund. We can’t offer personal advice — only factual information — but we’re happy to help where we can, so feel free to get in touch.

Disclosure: Members of Lakehouse team may (and likely do) own shares in some of the companies mentioned in this content.

Lakehouse Global Growth Fund (ARSN 621 899 367) (Fund). The responsible entity for the Fund is One Managed Investment Funds Limited (ACN 117 400 987) (AFSL 297042). The information included in this message has been prepared without taking account of the reader’s objectives, financial situation or needs. All of the commentary, statements of opinion and recommendations contain only general advice. Any person reading this message should, before deciding to invest in the planned Fund, read the product disclosure statement and seek professional advice.