JAMES HAYWARD | Look beyond AI for global investment opportunities

While much of the market’s attention is focused on a narrow group of companies and themes, including AI, the global investment universe remains vast. Some compelling opportunities can be found by continuing to explore sectors, geographies and business models beyond the market’s immediate focus.

Some of the most interesting investment opportunities arise when investors continue to look beyond the areas already attracting the most attention. Global investors have access to a remarkably broad opportunity set. Across the US, Europe, Japan, Latin America and emerging markets, thousands of listed businesses operate under different economic conditions, serve different industries and benefit from different drivers of growth. Yet markets often focus in one direction at a time. When that happens, it becomes easy to forget how many opportunities exist elsewhere. For active investors, the question is not only where the market is already looking, but also what opportunities might be outside its immediate field of vision.

The global investable universe is enormous. The US alone offers investors access to thousands of listed companies. Japan has nearly 4,000, while Europe and the UK add almost 6,000 more before investors even begin exploring emerging markets.

One example comes from the industrials sector, specifically, aerospace. Several years ago, we identified an opportunity in Rolls-Royce , the aircraft engine manufacturer. At the time, the company was emerging from the pandemic’s disruption and was priced as if it were going out of business, despite evidence to the contrary. Alongside this was a longer-term structural shift in Europe, where defence spending was becoming increasingly important. Together, these factors created an attractive opportunity.

What happened next is more revealing than the initial investment itself. Rather than viewing Rolls-Royce in isolation, we began exploring the broader ecosystem around the company. If Rolls-Royce manufactures aircraft engines, where do the critical components come from? Which businesses supply them? Which companies produce the materials required to manufacture them?

That process led us to Howmet Aerospace, a specialist manufacturer of highly engineered precision components for aircraft engines. Our research then moved a step further to Carpenter Technology, a producer of specialised metals and materials capable of withstanding extreme heat, pressure, and corrosion. More recently, we added ATI, another advanced materials company benefiting from many of the same aerospace trends.

What is striking is that these opportunities did not arise from starting with a predetermined market theme. They were uncovered by asking questions, exploring supply chains and following the evidence.

We’ll look at competitors, and we’ll start looking at the supply chain and the companies that feed into that.