A simple mantra has helped this $12 billion investor crush the market for the past decade
- Oppenheimer Global Fund, a portfolio of large-cap US and international stocks, has outperformed its MSCI benchmark index since 2008.
- Co-fund manager John Delano told Business Insider the fund uses a thematic approach that fits into the acronym MANTRA, which stands for Mass Affluence, New Technology, Restructuring, and Aging.
- For example, mass affluence is based on the bet that the world is going to get richer. As such, the fund is invested in luxury brands including LVMH.
The stock market may be going haywire, but John Delano has his sights set on 20 years from now.
He's the co-manager of the $12 billion Oppenheimer Global Fund, a portfolio of large-cap US and international stocks that has outperformed the MSCI All-country World Index (excluding the USA) since 2008 according to Morningstar data.
Like many stock pickers, Delano and his team have a bottom-up approach that scrutinizes several companies to single out stocks with the highest return potential. But he also uses a thematic approach to find companies tied to economic trends he thinks would still be powerful many years from now.
The themes fit into a simple acronym: MANTRA, which stands for Mass Affluence, New Technology, Restructuring, and Aging.
"The stocks are driven bottom-up, are owned for five-to-ten-plus years, and are driven by these ongoing trends that have a very long life to them, Delano told Business Insider. "We're betting on the sustainability of the advantages the companies have to really garner outperformance and returns."
Delano used mass affluence to illustrate how MANTRA comes to life in the portfolio.
Mass affluence is based on the view that, on aggregate, the world is going to get richer.
"As the world continues to create more wealth and people are able to move from a 'needs' to a 'wants' category with disposable income, one of the things they naturally want is for luxury goods," Delano said.
One of the fund's biggest holdings is LVMH, the parent of Louis Vuitton. Delano sees it as a company that's keen to buy out others for its growth, as the $13 billion deal with Christian Dior last year demonstrated. It's a company that "has the brands and economic moat that gives them a chance to earn sustainable returns," Delano said.
Luxury retailers stand out from the broader industry that's in turmoil, he added. That's because they usually have full control over their distribution. "Other retailers are really just trying to distribute products that they don't own," he said. "So the margin opportunity is drastically different."
Other luxury brands the fund owns include Kering, Tiffany, and Brunello Cucinelli.
Mass affluence is also likely to increase the need and desire for travel, Delano said.
The market for makers of consumer aircraft is effectively a duopoly between Airbus and Boeing. Delano's pick is Paris-listed Airbus.
"For Airbus, the real opportunity has been it's evolved over time from being a company really controlled by the various countries in Europe to being more commercially oriented," he said. The company was created in an agreement between the governments of the UK, France, and West Germany in 1970.