Recent global investor discussions have tended to focus on macro challenges, Trump tariffs, and the concentration of market value in a small number of technology companies. In addition, our Laurium Capital global equity team has spent a lot of time highlighting to investors the runway of growth benefiting electrification stocks as well as select pharmaceutical companies.
In the case of the electrification investment thesis, the companies in our portfolio remain ongoing beneficiaries of positive demand growth as well as the need to renew and upgrade the existing electricity grid infrastructure as new generation sources are added and load management becomes more complex. In the pharmaceutical arena, we have been confronted with the opportunities presented by significant advances in oncology treatments as well as weight-loss drugs – the GLP-1 (or “Ozempic”) boom. These specific areas have provided for much of the content of our investor debates and discussions, and we have often expanded on this in our written market commentaries.
However, there is another aspect of our work that we have hardly mentioned. This is what has been the “missing” element from our global equity portfolio in recent periods – the areas of the global economy and stock market that we have actively avoided investing in, and why. In our case, the most noteworthy of these has been in consumer goods. In recent times, we have generally steered clear of companies that produce discretionary consumer goods and even those involved right through the fast-moving consumer goods (FMCG) value chain, save for some Coke bottlers and Heineken (we will touch on those later).
This underweight is unusual for a fund that follows a “quality” style-bias, as we do, where a company’s strong financial health, pricing power, and enduring end-demand for the underlying product or service usually appeals to us as investors. These characteristics have often been closely associated with the large, successful FMCG and consumer blue-chips. So, what has kept us from investing a greater proportion of the portfolio in these consumer goods businesses, and why has this view been justified?
Many consumer-focused businesses benefited from a unique, favourable confluence of events following the pandemic—boosted demand out of lockdown, limited competition, and enhanced pricing power. On this latter point, many companies used this strong inflation period to push prices up very meaningfully, in some cases well ahead of the level that customers are willing and/or able to pay. As a result, we believe that many of these discretionary goods companies (even in the luxury goods space) are now “over-earning” relative to their long-term potential. This raises the risk of earnings normalization or even decline, which could leave valuations exposed.
Consumers globally are grappling with higher interest rates, tighter credit, and renewed cost-of-living pressures. These factors weigh particularly heavily on discretionary spending and have started to challenge the revenue growth and margin stability of many traditional consumer goods companies. Meanwhile, elevated cost inflation continues to pressure input costs, making it more difficult for companies to maintain historical profitability levels. This pressure will be exacerbated by tariffs and trade barriers that raise the costs for the end-consumer.
Consumer behaviour has been evolving. There is increasing demand for health-conscious, sustainable, and locally relevant brands, which challenges the dominance of traditional global FMCG giants. Digital-first and direct-to-consumer brands are growing in market share, and brand loyalty is no longer as dependable. Private label brands are of good quality, and easy to buy. As such, many of the previously “defensive” brands in the consumer space may be less well-positioned for the next phase of consumer evolution.
Ongoing global tensions have created several friction points in global trade, notably between producers in China and consumers in the US:
Taken together, these headwinds introduce structural challenges for global consumer businesses, especially those heavily reliant on scale and smooth cross-border logistics.
While we’ve generally remained underweight in consumer goods, we have made selective investments in companies like Coca-Cola bottlers and Heineken. These companies have demonstrated resilient demand, strong local execution models, and better ability to adapt to regional nuances and price ladders. Their exposure to emerging markets and beverages (a relatively defensive consumption category) makes them more attractive in the current environment and have helped the fund to deliver strong overall performance during a challenging period.
The Laurium Global Active Equity Fund is an actively managed, concentrated portfolio of global equities that aims to outperform the MSCI All Country World Index (ACWI). The Fund is managed by Rob Oellermann, who brings extensive experience in global markets, and is supported by Laurium’s broader Investment, Trading, and Quants teams. The team follows a disciplined, quality-oriented investment approach, focused on long-term value creation while remaining highly attuned to macroeconomic shifts, sector dynamics, and structural changes shaping the global landscape.
The Laurium Global Active Equity Fund was launched in August 2021 and has delivered excellent performance since inception. It is up 20.3% in USD for the 12 months ended 31 July 2025, versus the MSCI All Country World Index return of 15.9%. It is available for USD and ZAR investments either directly or via select platforms.
Disclaimer: Laurium Capital (Pty) Ltd is an authorised financial services provider (FSP 34142). Collective Investment Schemes in Securities (CIS) should be considered as medium to long-term investments. The value may go up as well as down and past performance is not necessarily a guide to future performance. CISs are traded at the ruling price and can engage in scrip lending and borrowing. A schedule of fees, charges and maximum commissions is available on request from the Manager. A CIS may be closed to new investors in order for it to be managed more efficiently in accordance with its mandate. There is no guarantee in respect of capital or returns in a portfolio. Performance has been calculated using net NAV to NAV numbers with income reinvested. The performance for each period shown reflects the return for investors who have been fully invested for that period. Individual investor performance may differ as a result of initial fees, the actual investment date, the date of reinvestments and dividend withholding tax. Full performance calculations are available from the manager on request. Annualised performance shows longer term performance rescaled to a 1-year period. Annualised performance is the average return per year over the period. Actual annual figures are available to the investor on request. Highest and lowest is returns for any 1 year over the period since inception have been shown. NAV is the net asset value represents the assets of a Fund less its liabilities. Prescient Management Company (RF) (Pty) Ltd is registered and approved under the Collective Investment Schemes Control Act (No.45 of 2002). For any additional information such as fund prices, fees, brochures, minimum disclosure documents and application forms please go to www.prescient.co.za.
Article from Daily Maverick
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