Unlike benchmarks, we think trends are forward-looking. And we think that if you’re looking for strong, long-term, powerful large trends, then the trends that are represented by environmental and social sustainability are as about as good as it gets.
We do something called grassroots research. We actually go on the ground. We conduct in-home interviews with people in emerging and frontier markets around the world. And being on the ground in these markets, sometimes it helps you make connections that you wouldn’t have thought of before you got there.
We were in Indonesia and we had an opportunity to meet with a young woman who ran a local roadside stand. A little roadside store. And we were talking to her through our translator. And she had told us how well she was doing, which was unusual because many of her competitors weren’t doing so well. And we asked her why. And she told us that it was because her online cosmetics business was really taking off. And this was a little roadside stand kind of in the middle of nowhere, and so we were a little bit surprised and we thought we heard it wrong from the translator.
But what happened was that this woman had gotten a phone three years earlier. And with that phone she had really been able to start to transform her life. So the first thing she was able to do is to actually check the prices that she was paying for all of the goods in her store and realize that she wasn’t always getting the best deal. So right away some technology had actually helped her economically. But then she realized that she could actually open an online kiosk and sell cosmetics. And so customers would now find her kiosk on this phone. She would deliver online banking instructions to them and they would deposit money in her online bank. Once she verified the money was there, she’d send her brother out on a motorcycle, and he would deliver the product and collect the rest of the payment in cash. And then they’d recycle that cash back into their business and it was a tremendous example of empowering this woman, who didn’t have an education, who was a single woman in a poor country, but through the use of technology again, she really was able to find some degree of empowerment.
And in our portfolios we realized that not only could the online shopping store that she was using be an interesting investment option, but so could the bank. And so could the telecom network that all of this was happening over.
Benchmarks don’t see growth. They don’t see opportunity. They don’t see change. And they don’t see innovation. And so the way that we’ve always chosen to approach investing as thematic investors is that rather than build off of a benchmark, we look for what are the powerful, long-term secular trends that are happening in the world around us. And we build our portfolios around those trends, rather than around benchmarks.
The views expressed herein do not constitute research, investment advice or trade recommendations and do not necessarily represent the views of all AB portfolio-management teams.