Funds bet on a consumer boom rivaled by ‘Roaring Twenties’

Photographer: Anthony Devlin / Bloomberg

Some of the world’s best money managers are betting on a post-pandemic spending boom that will boost real businesses as economies reopen and people get back to their normal lives.

Investors from Aberdeen Standard Investments Inc. and GAM Investments to UBS Asset Management are increasingly pouring money into companies where personal interaction is the norm – things like travel companies, restaurants, offline shopping and ‘consumer experiences’.

“A lot of people think this will really lead to a new ‘roaring 20s’ theme,” said Swetha Ramachandran, GAM’s Luxury Brands Equity fund manager, citing the growing view that post-pandemic spending is harking back to excesses. of the twenties. That’s when euphoric consumers plunged into a spate of spending after World War I and the 1918 flu pandemic. “There will be a lot of peacocks” when people socialize, she said.

Investors began piling on cyclical stocks benefiting from an economic recovery late last year after good news on the vaccine front, as they pulled away from highly valued technology stocks. The rotation accelerated as government bond yields rose in mid-February. Now with stimulus checks making their way across the US – the beneficiary of half of the $ 2.9 trillion in savings Accumulated worldwide during the pandemic – consumer stocks are facing an even greater rebound.

Of course, no one says the pandemic is almost over. Europe is facing a slow roll-out of vaccines, with renewed limitations on daily life in some countries, while the seven-day average of new US Covid-19 cases is rose, showing that cases in the United States are on the rise again and threaten a return to normal life. Digitization is permanent – no retailer will return to a pure physical world.

But a momentary shift to consumer discretionary in November, as the “reopening” trade came into fashion, has room to catch up. A sub-measure of global energy stocks has been performing best by sector since late October, up 53%, while the consumer discretionary index is only 17% higher.

According to data compiled by Bloomberg, the indicator for global consumer discretionary stocks is expected to return 17% over the next 12 months, while the S&P 500 index is expected to rise 12%.

“People want to travel. They want to see family they haven’t seen in a long time. They want to go out with friends, ”says Donny Kranson, European Equities Portfolio Manager at Vontobel Asset Management.

Theme parks, airlines and even beer are back.

On the travel side, funds are putting into staycation-friendly hotels such as Marriott International Inc. and housing-sharing company Airbnb Inc., theme parks such as Six Flags Entertainment Corp., and even US-listed Chinese online travel agency Trip.com Group Ltd., based on interviews with Miller Tabak + Co., Scottish Investment Trust and AGF Investments Inc.

Marriott has gained 11% so far this year, while Airbnb, Six Flags and Trip.com are up 19%, 41% and 11% respectively. All have outperformed the S&P 500 in 2021.