In 2024, our World Stars Global Equity strategy performed strongly despite macroeconomic and geopolitical challenges thanks to its focus on quality and the diversification of the underlying drivers of value for our stock holdings.
The industrial sector benefited from key structural trends like the transition to net zero, reshoring, and AI infrastructure, with companies like Eaton and Amphenol excelling. Amphenol, in particular, thrived due to its diverse exposure across end markets, including AI and 5G, providing strong growth potential despite short-term issues in other sectors. Looking ahead, we expect the industrial sector to continue evolving, underpinned by the need to invest in the efficiency, capacity and sustainability of public and private infrastructure.
In the technology sector, AI remained the dominant theme, with Nvidia leading the way. The company’s quality products and robust product ecosystem positioned it to exceed expectations. Meta also posted strong returns, leveraging AI to enhance its advertising model. As AI continues to expand, the sector’s valuation remains attractive, particularly with the emergence of agentic AI, which we expect to be a major growth driver in 2025.
The consumer sector faced challenges due to inflation, high interest rates and weak demand, but valuations have become more appealing. Companies like Diageo, with a diversified portfolio, are expected to recover as supply chain issues ease.
In healthcare, while policy uncertainty remains, quality innovation in companies like EssilorLuxottica positions them well for growth. The company’s strategic diversification into eyewear, hearing solutions and smart eyewear adds significant growth potential to its core business.
We believe the quality of our companies will enable them to remain resilient in a challenging year, while their growth opportunities and attractive valuations make us optimistic that they will continue to offer strong prospects for value generation.
Industrials
In a year dominated by macroeconomic and geopolitical events, the industrial sector demonstrated resilience and adaptability by aligning closely with key structural themes. The transition to net zero, the reshoring of critical industries, the modernisation of aged infrastructure, the need to automate to replace scarce and expensive labour and a structural step up in defence spending is set to fuel the sector for decades.
At the same time, capital investments in AI and data centres, where energy constraints are critical considerations, gathered pace during 2024 providing an additional pillar of growth. This accelerating momentum is most visible in mega project activity in the US (projects over USD 1 billion in value), which at the end of the 3rd quarter stood at USD 1.6 trillion since January 2021 and up from USD 600 billion since the 1st quarter of 2023.
Industrial companies providing power management and connectivity solutions were among the primary beneficiaries of this momentum. Eaton, highlighted in our December Investment Insight last year, was our top-performing industrials holding this year, closely followed by Amphenol.
Amphenol – benefiting from the ‘electrification of everything’
Amphenol, a leading supplier in interconnect and sensor solutions is up 50% year-to-date, as a key beneficiary of the ‘electrification of everything’ and the proliferation of electronics across end markets. The company’s diversification, with no end market accounting for more than 25% of sales, makes it particularly attractive because it allows the company to participate in structural trends across applications and provides a shield from short weakness in any single one.
Growth during 2024 was particularly robust in its IT and datacom division. It accounted for 25% of sales and was up more than 50% in the past several quarters, fuelled by the demand for AI-related applications.
Next-generation AI systems are more interconnect-rich and require high-speed, low-latency and power-efficient designs to support the dense AI computer racks. Amphenol has been investing in the space in terms of product development in recent years and is now able to leverage the benefits of that with the broadest and deepest connector offering in the data centre market.
At the same time, other areas of the company’s business like mobile networks are seeing increasing demand from structural investments in 5G network infrastructure. Within its commercial aerospace and military businesses demand has benefited from robust end-market trends and higher content in the next-generation platforms. On the weaker side this year has been the company’s industrial end market, accounting for 23% of sales, which has been seeing elements of destocking at the distributor level, but continues to benefit from the digitalisation of physical asset infrastructure, and which is set to accelerate in 2025 as some these short-term headwinds fade.