Unleashing Potential: A Comprehensive Guide to Investing in India's Booming Economy

Investing in India from Australia presents a promising opportunity for savvy investors looking to diversify their portfolios and capitalise on emerging markets. 

As one of the fastest-growing economies in the world, India offers robust growth prospects, driven by rapid industrialisation, a burgeoning tech sector, and a dynamic consumer market. 

Moreover, global shifts in supply chains away from China are positioning India as a key player on the global stage. 

This guide explores why India is an attractive investment destination, the best sectors to consider, and the practical steps Australian investors need to take to enter the Indian market confidently.

Why Choose India for Your Next Investment?

Once considered a sluggish and underperforming economy, India’s economy is now one of the fastest-growing in the world. Despite global economic challenges, India’s experienced a GBP growth rate of 7.8% in 2023, compared to the United States (2.5%) and Australia (2.1%). 

With a population of over 1.3 billion, India boasts a vast consumer market that is increasingly affluent and aspirational. This expanding middle class, coupled with a young and tech-savvy workforce, has fueled demand for a wide range of products and services, creating lucrative opportunities across various sectors.

One of the key drivers of India’s economic growth has been the technology and services industries. The country has emerged as a global hub for information technology (IT) services, software development, and business process outsourcing (BPO). Major multinational corporations such as Microsoft, Apple, and IBM have established operations in India, attracted by the availability of skilled labour and cost-effective solutions.

Moreover, India’s manufacturing sector has gained significant momentum in recent years. Initiatives such as “Make in India” have aimed to position the country as a global manufacturing hub ​​by encouraging both domestic and foreign companies to set up manufacturing units.

With a vast domestic market, a skilled workforce, and a pro-business government, India presents a compelling investment opportunity for Australian investors seeking to diversify their portfolios and tap into the potential of an emerging economic powerhouse.

Demographic Advantages

One of India’s most significant advantages lies in its demographic profile, which presents a unique opportunity for sustained economic growth and investment returns. With a median age of just 28.7 years, India boasts a young and rapidly growing population, providing a substantial demographic dividend.

This demographic dividend refers to the economic growth potential that arises from having a large working-age population relative to the dependent population (children and elderly). India’s youthful workforce not only contributes to increased productivity and economic output but also drives domestic consumption and fuels demand across various sectors.

As incomes rise and living standards improve, the middle class is expanding rapidly, creating a burgeoning consumer market for goods and services. This trend has attracted significant investment from both domestic and international companies seeking to capitalise on India’s growing purchasing power.

Additionally, India’s demographic profile has contributed to a skilled and tech-savvy workforce. The country has a large pool of educated and talented individuals, particularly in fields such as engineering, technology, and healthcare. This human capital has been a driving force behind India’s success in sectors like information technology, biotechnology, and pharmaceuticals, making it an attractive destination for investment in these industries.

Shifting Global Supply Chains

In recent years, a significant shift has been observed in global supply chains, with many developed economies, including the United States, actively seeking to reduce their reliance on China for manufacturing and sourcing needs. This strategic move has been driven by a combination of factors, including geopolitical tensions, trade disputes, and the vulnerabilities exposed by the COVID-19 pandemic.

The disruptions caused by the pandemic highlighted the risks associated with an over-reliance on a single country or region for critical supply chains. As a result, companies and governments alike have recognised the importance of diversifying their supply chains and building resilience to mitigate future shocks.

India has emerged as a prime beneficiary of this shift, positioning itself as a favorable alternative to China for global manufacturing and sourcing operations. 

Several factors contribute to India’s attractiveness in this regard:

  1. Competitive labour costs: India offers a skilled and cost-effective labour force, making it an attractive destination for labour-intensive industries seeking to optimise their production costs.
  2. Domestic market potential: With a population of over 1.3 billion and a rapidly growing middle class, India presents a vast domestic market for companies looking to establish a local presence and cater to the increasing consumer demand.
  3. Government initiatives: The Indian government has implemented various policies and initiatives, such as “Make in India” and the Production Linked Incentive (PLI) scheme, to attract foreign direct investment (FDI) and encourage domestic manufacturing across sectors like electronics, pharmaceuticals, and automobiles.
  4. Improving infrastructure: Significant investments have been made in developing India’s infrastructure, including transportation networks, power grids, and industrial corridors, to support the growth of manufacturing and logistics operations.

As companies seek to diversify their supply chains and reduce their dependence on China, India’s favourable conditions, including its skilled workforce, domestic market potential, and government support, make it an attractive destination for investment and manufacturing operations.

By capitalising on this shift in global supply chains, Australian investors can potentially benefit from the growth opportunities presented by India’s expanding manufacturing and logistics sectors, as well as the increased demand for goods and services catering to the country’s burgeoning consumer market.

How to take advantage of this opportunity

If you’re looking to invest in India but aren’t sure which company or ETF to invest in, the Future Shapers portfolio has our highest exposure to Indian companies that are at the forefront of shaping tomorrow’s landscape.

It allows you to invest early in transformative industries, companies and economies. 

This portfolio provides exposure to up to 200 companies and combines in-depth research, forward-thinking analysis, and continual risk mitigation. 

We constantly stay informed about emerging trends, technologies, and industry developments to ensure that this portfolio is perfectly balanced to succeed.

Indian companies our portfolio is invested in

As part of our strategic investment approach, we have carefully selected a portfolio of Indian companies that align with our investment philosophy and offer promising growth prospects. 

Indian companies with exposure in the Future Shapers portfolio:

Adani Enterprises Ltd is the flagship company of the Adani Group, with a diversified business portfolio spanning sectors such as resources, logistics, agribusiness, and energy.

A significant appreciation in their share price has cemented the company’s status as a powerhouse in India’s rapidly evolving business landscape.

Adani Enterprises Ltd, the flagship company of the Adani Group, presents an attractive investment opportunity due to its diversified business model spanning resources, logistics, agribusiness, and energy sectors. 

This diversification provides a hedge against industry-specific risks, ensuring a more stable revenue stream and growth potential.

Furthermore, the company’s strong focus on infrastructure development aligns with India’s ambitious plans for infrastructure upgrades and economic growth, positioning it to benefit from increased government spending and private investments in this sector. 

Adani Enterprises has also made significant investments in renewable energy projects, including solar and wind power generation, which hold promising growth prospects as India transitions towards a more sustainable energy mix. 

Additionally, the company’s active pursuit of international expansion, particularly in the mining and resources sector, diversifies its revenue streams and provides access to new markets, further enhancing its investment appeal.

Adani Green Energy Ltd, a leading renewable energy company in India, is well-positioned to capitalise on the country’s commitment to increasing its renewable energy capacity, presenting a significant growth opportunity. 

Their share price has grown over 4,700% in the last 5 years, reflecting the company’s remarkable growth trajectory and investor confidence in its prospects.

The company’s focus on solar and wind power generation aligns with the Indian government’s implementation of various incentives and policies to promote renewable energy adoption, such as tax credits, subsidies, and renewable purchase obligations. 

These favourable policies support the growth of companies like Adani Green Energy. Moreover, the company’s investments in cutting-edge renewable energy technologies, including solar tracking systems and efficient wind turbines, demonstrate its commitment to innovation, which can enhance its competitiveness and profitability. 

As environmental concerns and the demand for clean energy continue to rise globally, Adani Green Energy’s focus on sustainable energy solutions aligns with global trends, making it an attractive investment for environmentally conscious investors.

Adani Power Ltd, a prominent player in the Indian power generation sector, offers a compelling investment opportunity with its diverse portfolio of thermal and renewable energy assets. 

This diversified energy mix provides a hedge against fluctuations in fuel prices and regulatory changes affecting specific energy sources. The company has been implementing measures to enhance operational efficiency and reduce costs, which can improve profitability and competitiveness in the power generation market. 

Adani Power also has ambitious expansion plans, including the development of new power plants and the acquisition of existing assets, which can drive future revenue and earnings growth. 

Furthermore, the Indian power sector is ripe for consolidation, and Adani Power’s strong financial position and operational expertise make it well-suited to capitalise on potential acquisition opportunities, further bolstering its growth prospects.

Their share price has grown over 1,400% in the last 5 years, a staggering increase that underscores the company’s strong performance and growth potential in India’s rapidly expanding power sector.

These three companies fall within the asset mix of the GQG Partners Emerging Markets Equity Fund, which has over 30% exposure to India. The Medici Invest Future Shapers portfolio has an allocation of this investment vehicle to gain access to these uniquely positioned opportunities. 

With their strong fundamentals, innovative approaches, and commitment to sustainable practices, the team at GQG Partners believe these companies are well-positioned to deliver long-term value to our portfolio. 

As India continues its trajectory towards becoming a global economic powerhouse, we remain committed to closely monitoring and evaluating our investments, ensuring that they align with our investment objectives and contribute to the overall growth and success of Future Shapers.

How to invest in India

If the Future Shapers portfolio sounds like an investment strategy you’re interested in, you can complete the application process in less than 5 minutes. 

To get started:

Step 1: Click this get started link

Step 2: Create an OpenWealth account 

Step 3: Go to our products tab and select the Future Shapers portfolio. 

Step 4: Enter the amount of money you’d like to invest

Step 5: Choose your account type

Step 6: Answer the onboarding questions – it should take less than 5 minutes

Step 7: Transfer your funds through BPAY or via direct bank transfer

Step 8: You’re good to go! You’ll be able to monitor the performance of your investment portfolio directly through the app or your online portal.

It’s that easy! 

If you have any questions, don’t hesitate to call us on (03) 9637 1608 or via our online contact form.

Sustainable investing is rapidly gaining traction in Australia as more investors seek to align their financial goals with their values and contribute to a better future. 

This approach considers environmental, social, and governance (ESG) factors alongside traditional financial metrics when evaluating investment opportunities. 

By investing in companies and funds that prioritise sustainability, Australian investors can drive positive change while potentially achieving competitive returns. 

With the growing demand for ethical and responsible investments, sustainable investing offers a way to make a meaningful impact while building a diversified portfolio.

At Medici Invest, we provide access to a sophisticated sustainability-focused investment portfolio, typically reserved for full-service clients.

In this comprehensive guide, we’ll explore how to invest in sustainable companies in Australia by evaluating sustainable investment opportunities to find the right companies for your goals and values.

We’ll also discuss our Green Horizons portfolio as well as 6 Australian companies that we believe are at the forefront of the sustainability movement.

Evaluating Sustainable Investment Opportunities

Understanding Sustainable Investing vs Ethical Investing

For first-time investors looking to invest in sustainable companies, we recommend that you take the time to clearly define your personal values, ethical principles, and investment goals before deciding on an individual company, ETF or portfolio to invest in.

Establishing your priorities will help guide your investment decisions and ensure alignment with your beliefs.

For example, while sustainable investing and ethical investing are often used interchangeably, there are some key differences between the two approaches:

Sustainable investing takes a broader approach by considering environmental, social, and governance (ESG) factors alongside traditional financial analysis. 

The focus is on identifying companies and investments that are well-positioned for long-term success by effectively managing ESG risks and opportunities.

Some key aspects of sustainable investing:

  • Uses positive and negative screening to evaluate companies based on ESG criteria
  • Aims to generate competitive financial returns while driving positive environmental and social impact
  • Emphasises long-term sustainability and the transition to a low-carbon economy
  • Employs strategies like ESG integration, thematic investing, and impact investing

Ethical investing, also known as socially responsible investing (SRI), is primarily values-based. The goal is to align investments with an investor’s ethical principles, moral values, or religious beliefs.

Key points about ethical investing:

  • Focuses on excluding companies or sectors that are deemed unethical or controversial (e.g., tobacco, weapons, gambling)
  • Uses negative screening to avoid investments that conflict with the investor’s values
  • Can be highly subjective, as ethical standards vary from investor to investor
  • May prioritise avoiding harm over driving positive change

While there is some overlap, the main distinction is that sustainable investing takes a more comprehensive approach by evaluating ESG factors, while ethical investing is primarily guided by an investor’s personal values and ethical exclusions.

However, many investors employ a combination of both strategies, using ESG analysis to identify sustainable investment opportunities while also applying ethical screens to avoid misalignment with their core values and beliefs.

Ultimately, this decision is subjective to your personal values, ethical principles, and investment goals and taking the time to self-evaluate will help immensely when evaluating new companies, ETFs or portfolios.

Analysing ESG Ratings and Reports

As sustainable investing continues to gain traction, numerous organisations such as MSCI and Sustainalytics have emerged to provide independent assessments and ratings of companies’ environmental, social, and governance (ESG) performance. 

While the specific methodologies and criteria may vary across providers, ESG ratings generally assess a company’s performance across a range of factors, such as:

  • Environmental: Carbon emissions, energy efficiency, waste management, resource depletion, and environmental policies.
  • Social: Labor practices, human rights, product safety, community relations, and employee engagement.
  • Governance: Board composition, executive compensation, shareholder rights, business ethics, and anti-corruption measures.

These ESG ratings and reports can be valuable tools for investors seeking to evaluate potential investments through a sustainability lens.

Beyond the numerical ratings, ESG reports often provide valuable qualitative insights into a company’s sustainability practices, risks, and opportunities. 

These reports can highlight areas of strength or concern, as well as identify potential controversies or incidents that may impact a company’s ESG performance.

You can use these ratings to compare which companies are meeting key metrics and which ones are falling short.

Researching Companies’ Sustainability Practices and Policies

While ESG ratings can provide a helpful overview, investors should dig deeper to gain a comprehensive understanding of a company’s sustainability approach and performance.

Here are some key areas to investigate when researching a company’s sustainability practices:

Most large public companies publish their own annual sustainability or ESG reports detailing their policies, initiatives, goals, and performance metrics related to environmental, social, and governance issues. 

These reports can offer valuable insights into a company’s sustainability strategy, commitments, and progress over time.

Compare these findings with whichever 3rd party ESG organisation you used to research in the last step to find potential inconsistencies.

Review a company’s publicly available policies and codes related to areas like environmental management, human rights, labour practices, ethics, and corporate governance. 

These documents outline the principles and standards the company aims to uphold.

Public companies are required to disclose certain ESG-related information in their annual reports, proxy statements, and other regulatory filings. 

These can reveal details about a company’s governance structure, executive compensation, environmental compliance, and potential risks or controversies.

Investigate whether a company participates in relevant industry initiatives or has obtained certifications related to sustainability, such as the UN Global Compact, Science Based Targets initiative, or ISO 14001 for environmental management systems.

Monitor news coverage, NGO reports, and other external sources for information about a company’s sustainability performance, controversies, or areas of concern. 

This can provide a more balanced perspective beyond the company’s self-reported data.

By thoroughly researching a company’s sustainability practices and policies from multiple credible sources, you can make more informed decisions about whether a particular investment aligns with your values, risk tolerance, and long-term sustainability goals.

Why Sustainable Investment Funds and Portfolios can be the better choice

While some investors may choose to build their own sustainable investment portfolios by individually researching and selecting companies, investing through professionally managed sustainable funds or pre-built portfolios can offer several advantages including:

  • Diversification to mitigate risk and volatility, which is particularly important when investing in emerging sustainable industries or technologies.
  • Dedicated teams that conduct in-depth research and analysis to identify companies with strong ESG practices and promising sustainable business models. 
  • Access to a wider range of asset classes that may be difficult for individual investors to access directly.
  • Ability to sustainably invest without the need for extensive individual research and monitoring.

At Medici Invest, our Green Horizon portfolio has a dedicated committee team that carefully combines in-depth research, forward-thinking analysis, and continual risk mitigation.

We actively monitor new sustainable trends, technologies, and industry developments to ensure the Green Horizons Portfolio’s asset allocation remains well-positioned based on evolving market conditions. 

Please note: Green Horizon isn’t an ESG portfolio. We invest in industries and organisations that are at the forefront of the transition to renewable energy and best positioned to benefit from this industrial evolution.

6 Companies From Down Under We’re Invested In

As part of our commitment to sustainable investing, we’ve carefully selected a diverse range of Australian companies that are driving innovation and progress towards a cleaner, more sustainable future. 

Here are six companies in our Green Horizons portfolio that we view as leaders in adopting and innovating sustainable change while still offering attractive investment opportunities:

Boss Energy Ltd. (ASX: BOE)

Boss Energy Ltd. (ASX: BOE) is an Australian uranium exploration and development company focused on the Honeymoon Project in South Australia. 

With a commitment to sustainable mining practices, minimising environmental impact, and engaging local communities, Boss Energy provides exposure to uranium – a low-carbon baseload energy source. 

Their share price has grown 96.73% in the past year (as of April 16, 2024), and as nuclear power plays a role in the energy transition, Boss Energy is well-positioned to benefit from growing demand while adhering to strict ESG standards.

Lynas Rare Earths Ltd (ASX: LYC)

Lynas Rare Earths Ltd (ASX: LYC) is the only major producer of refined rare earth materials outside China. 

These critical minerals are essential for renewable technologies like electric vehicles and wind turbines. 

Lynas has implemented industry-leading environmental standards and aims to establish a sustainable rare earths supply chain. 

With rising demand for clean energy solutions, Lynas offers exposure to a key enabling resource while prioritising responsible operations and environmental stewardship.

Santos Ltd (ASX: STO)

While a traditional fossil fuel company, Santos is taking significant strides towards cleaner energy and sustainability.

The company has committed to achieving net-zero emissions by 2040 and is investing heavily in carbon capture and storage (CCS) technologies. 

Santos is also pursuing growth in cleaner fuels like hydrogen and has set ambitious targets for reducing operational emissions.

Meridian Energy Ltd (ASX: MEZ)

Meridian Energy is New Zealand’s largest renewable energy generator, with a portfolio focused on wind farms and hydroelectric power stations. 

With its exclusive focus on renewable generation assets, Meridian Energy offers investors pure-play exposure to the global transition towards clean energy sources.

The company has an unwavering commitment to sustainability and renewable energy and 100% of its electricity generation is through renewable sources.

The company has experienced 33.67% growth over the past 5 years (as of April 16, 2024) and has been included in our portfolio due to its strong financial performance backed by long-term renewable energy contracts.

Genex Power Ltd (ASX: GNX)

Genex Power (ASX: GNX) is an Australian renewable energy company developing a portfolio of pumped hydro, solar and wind projects. 

Its flagship Kidston Clean Energy Hub integrates large-scale solar with pumped hydro storage, supporting grid stability. 

Genex is pioneering pumped hydro technology and offers exposure to critical energy storage solutions needed for transitioning to higher renewable penetration. 

With an experienced team and strong project pipeline including a revenue deal with Tesla for its Bouldercombe big battery in Queensland, Genex provides sustainable investors access to innovative clean energy assets. 

This company has seen a 66.88% increase in share price in the last 12 months (as of April 16, 2024).

Origin Energy Limited (ASX: ORG)

Origin Energy is one of Australia’s leading integrated energy companies, with operations spanning electricity generation, natural gas production, energy retailing, and renewable energy development. 

While Origin has a significant fossil fuel portfolio, the company is taking meaningful steps towards sustainability and the energy transition.

The company has invested heavily in growing its renewable energy portfolio, including large-scale wind, solar, and battery storage projects.

They’ve also invested heavily in Octopus Energy to establish a leading global renewable energy retailer and are developing the Hunter Valley Hydrogen Hub to produce green hydrogen using renewable energy.

For investors seeking exposure to the energy transition within a diversified sustainable portfolio, Origin Energy offers a mix of traditional energy assets providing funding sources, combined with an increasing focus on renewables and low-carbon solutions for the future.

The company has also seen a share price growth of 28.54% over the past five years (as of April 16, 2024).

How to Invest in Sustainable Companies

While researching and selecting individual sustainable stocks can be time-consuming, Medici Invest provides an accessible solution through our Green Horizons portfolio

Unlike our other portfolios, Green Horizons focuses on industries and organisations that are at the forefront of the transition to renewable energy and best positioned to benefit from this industrial evolution – a fusion of financial wisdom and environmental consciousness.

To get started:

Step 1: Click this get started link

Step 2: Create an OpenWealth account

Step 3: Go to our products tab and select the Green Horizons portfolio

Step 4: Enter the amount of money you’d like to invest

Step 5: Choose your account type

Step 6: Answer the onboarding questions – it should take less than 5 minutes

Step 7: Transfer your funds through BPAY or via direct bank transfer

Step 8: You’re good to go! Monitor your sustainable investment portfolio through the app or online portal

It’s that simple! 

By investing in Green Horizons, you’ll gain exposure to a diversified portfolio of companies at the forefront of the sustainability revolution without the hassle of individual stock picking. 

Our team of experts continually monitors emerging trends, technologies, and industry developments to ensure your portfolio remains optimally balanced and positioned for success.

Ready to invest in sustainability?

Ready to align your investments with your values and contribute to a more sustainable future? 

Explore our Green Horizons portfolio and let our team of experts guide you towards responsible investing opportunities. 

If you’re ready to invest, click this get started link, create an OpenWealth account and answer the onboarding questions.

If you’d like to speak directly with the Medici Invest team, give us a call on (03) 9637 1608 or contact us online to learn more about how this portfolio is a must-have as a part of your overall investment strategy!

Investing in new technology is a compelling avenue for those looking to diversify their portfolios and tap into the future’s potential. 

It embodies the unique advantage of driving progress and potentially generating substantial returns.

While investing in the right companies offers significant growth potential for early investors, if you don’t know what you’re looking for you’ll most likely miss opportunities or make misguided decisions.

Medici Invest provides access to a sophisticated new technology investment portfolio, typically reserved for full-service clients.

Backed by Lanteri Partners, a respected Wealth Management firm that has stood by Australians for decades, we’ve created an advanced new technology investment strategy accessible to all.

Keep reading to learn about how you can invest in our Future Shapers portfolio and begin aligning your investments with the trajectory of the world’s future development.


How to Invest in New Technology

If you’re ready to invest in new technology, don’t risk putting all your eggs in one basket. 

Our Future Shapers portfolio provides exposure of up to 200 companies combining in-depth research, forward-thinking analysis, and continual risk mitigation. 

We constantly stay informed about emerging trends, technologies, and industry developments to ensure that our Future Shapers Portfolio is perfectly balanced to succeed.

To get started:

  • Step 1: Click this get started link
  • Step 2: Create an OpenWealth account 
  • Step 3: Go to our products tab and select the Future Shapers portfolio. 
  • Step 4: Enter the amount of money you’d like to invest
  • Step 5: Choose your account type
  • Step 6: Answer the onboarding questions – it should take less than 5 minutes
  • Step 7: Transfer your funds through BPAY or via direct bank transfer
  • Step 8: You’re good to go! You’ll be able to monitor the performance of your investment portfolio directly through the app or your online portal.

It’s that easy! 

If you’re interested in delving deeper into the cutting-edge technologies that have captured our interest, the pioneering companies leading the charge, and the critical factors you should take into account, we’ll provide everything you need to know.    

 

5 New Technologies our Portfolio is Invested in

Artificial Intelligence (AI)

While you’re probably aware of ChatGPT, AI is already utilised across a wide range of sectors. 

With its ability to learn from data, adapt to new scenarios, and perform tasks with increasing accuracy over time, we’re only starting to scratch the surface of AI’s potential.

With no signs of slowing down, AI could be worth an extra $315 billion to the Australian economy by 2030.

Investing in the companies at the forefront of this innovation is a sound strategy to financially benefit from this expected growth.

Our Future Shapers portfolio contains a variety of companies that are at the cutting edge of AI innovation including:

  1. Microsoft Corporation: Microsoft provides substantial investment and computational resources to fuel pioneering AI research and innovation, essential for driving future technological advancements.
  2. NVIDIA Corporation: NVIDIA has transformed from graphics and gaming into a leader in AI and deep learning with its powerful GPUs driving advancements in machine learning, autonomous vehicles, and data centres.
  3. ASML Holding: ASML is critical to AI’s infrastructure, providing photolithography systems needed for producing advanced semiconductors that enable cutting-edge AI computing capabilities.
 

Blockchain

Blockchain is far more than just the backbone of cryptocurrency; it’s revolutionising sectors by providing transparency, security, and efficiency.

Particularly in areas like supply chain management and secure transactions, blockchain presents a fertile ground for investment. 

Statista predicts that blockchain’s economic value could be worth $943 billion USD by 2032, representing a CAGR of 56.1 percent.

Investors are uniquely positioned to capitalise on this technology as it continues to evolve and reshape entire industries. 

With its growth and integration into various sectors, investors can seize the chance to support and partake in innovative projects that leverage blockchain’s unique attributes. 

As it moves beyond finance into fields like healthcare, real estate, and digital identity, the potential for sustainable, transformative investments expands, presenting unprecedented opportunities for those ready to engage with this dynamic technology.

 

Electric Vehicles (EV)

Anticipated to grow at a consistent annual rate of 9.82% (CAGR 2024-2028), the market is projected to expand to a value of US$906.7 billion by 2028.

As the EV market matures and expands, its growth potential becomes even more significant. 

This growth is not just limited to vehicle sales but extends across the entire supply chain, including battery production, charging infrastructure, and technological innovations aimed at improving range and performance.

Our Future Shapers portfolio reflects this comprehensive approach, covering not just leading EV manufacturers like Tesla and BYD Company Limited but also key players like Samsung, who are spearheading the advancement of lithium-ion batteries crucial for powering these vehicles. 

 

Energy Transition

Investing in the energy transition offers a unique blend of benefits that align with both financial growth and environmental sustainability. 

Global investment in energy transition hit 1.8 trillion in 2023, up 17% from the previous year as well as Government’s globally having allocated USD 1.34 trillion to clean energy since the pandemic. 

The shift towards renewable energy sources like solar, wind, and hydro presents significant growth opportunities, driven by increasing global demand for cleaner and more sustainable energy solutions.

For the first time, we are seeing the investment in solar exceed the investment in oil internationally, reflecting both public demand for cleaner energy as well as Government commitment to sustainable development and carbon reduction goals. 

Our Future Shapers portfolio features exposure to this growing sector through companies pioneering this space such as:

  • Vestas Wind Systems: A global leader in manufacturing wind turbines, providing modern energy solutions that contribute to a significant reduction in carbon emissions.
  • Ecolab Inc: At the forefront of water, hygiene, and infection prevention solutions and services, playing a critical role in supporting clean energy and environmental sustainability initiatives.
  • NextEra Energy Inc: The world’s largest producer of wind and solar energy, leading the charge in clean energy generation and energy storage.

By integrating companies like these into our portfolio, we aim to capitalise on the dynamic growth of the clean energy sector, as well as diversify into different green energy technologies to reduce exposure to individual risks and create a robust investment mix.

 

Biotechnology

Investing in biotechnology offers several opportunities for strong returns on investment, primarily due to the sector’s dynamic nature and potential for significant breakthroughs.

Biotechnology is at the forefront of scientific innovation, particularly in health, medicine, and agriculture. 

Investments can lead to groundbreaking treatments, vaccines, or farming solutions, which can be highly profitable.

However, it’s important to note that biotech investments can also be risky due to high research and development costs, regulatory hurdles, and the binary nature of clinical trial results. 

Therefore, thorough research and a well-considered investment strategy are essential. 

To combat this, our Future Shapers portfolio has a dedicated Investment Committee Team who are incredibly agile. 

They have the ability to adapt swiftly to market changes, enabling them to optimise portfolio performance and minimise risk effectively.

 

Things to Consider When Investing in New Technology

When considering investments in new technology, it’s essential to approach with both enthusiasm for innovation and a strategic understanding of the associated risks and opportunities. 

Here’s a detailed look at things to consider:

Evaluate the potential market size and growth for the new technology. 

Consider whether the technology addresses a genuine need or is likely to become a must-have in its intended market. 

A larger market potential often translates to higher revenue opportunities​​.

Assess the competitive environment of the technology sector you are considering. 

Identify the key players, their market share, and the unique value proposition of the new technology compared to existing solutions. 

Understand whether the technology has a sustainable competitive advantage​​​​.

New technology sectors can be heavily impacted by regulatory changes. 

Consider the current regulatory environment and any anticipated changes that could affect the market. 

For example, data privacy laws have significant implications for tech companies in sectors like cloud computing and AI​​.

Evaluate the technical feasibility and the stage of development of the new technology you’re looking to invest in. 

Consider whether the technology is proven and if there are any major technical hurdles that need to be overcome for it to be successful​​​​.

Moreover, it’s important to recognise that not all emerging technologies achieve mainstream adoption. 

Some may only enjoy temporary popularity, turning out to be fads. 

An example of this phenomenon is 3D printing, which, despite its revolutionary potential, has not become as ubiquitous in consumer applications as initially anticipated. 

This underscores the importance of discerning between technologies with lasting impact and those that might not sustain long-term interest or utility.

Analyse the financial health of the company or companies developing the new technology. 

Look at their revenue growth, profitability, cash flow, and R&D spending. 

Additionally, assess the stock’s valuation to ensure you’re not overpaying for potential future growth​​​​.

Consider how quickly the technology is being adopted and any barriers that could slow its adoption, such as high costs, technical complexity, or lack of consumer awareness.

While high adoption rates can signal a technology’s potential success, notable barriers present challenges that necessitate thoughtful strategic approaches to address. 

It’s worth noting that investments within the Future Shapers portfolio often reside at the early stages of the S-curve. 

This positioning suggests they are in the initial phase of adoption, where growth is starting to accelerate, highlighting the importance of navigating early obstacles to unlock their full potential.

Consider your investment horizon and exit strategy. New technology investments can take longer to mature, so you’ll need to be prepared for a long-term commitment. 

For our Future Shapers portfolio, we recommend an investment timeframe of at least 7 years to allow for the full potential of disruptive technologies to unfold and significantly impact the market. 

Given the nature of emerging tech, developments and advancements can lead to exponential growth but might require patience to navigate through cycles of innovation and market adoption. 

Think about how and when you might exit your investment, particularly if the market environment changes or if the technology fails to meet expectations​​​​.

Ready to invest in emerging technologies?

As we embrace the future of new technology, our Future Shapers portfolio offers an unparalleled opportunity to invest in a diverse range of companies leading the way in their respective fields.

If you’re an investor with a higher risk tolerance level, this portfolio has a strong possibility of promising returns, aligning cutting-edge technological advancements with your investment goals for a forward-thinking approach to your financial future.

If you’re ready to invest, click this get started link, create an OpenWealth account and answer the onboarding questions.

If you’d like to speak directly with the Medici Invest team, give us a call on (03) 9637 1608 or contact us online to learn more about how this portfolio is a must-have as a part of your overall investment strategy!

Overview: This article challenges the misconception that millennials and younger generations avoid traditional financial advice, highlighting the transformative impact of strategic financial planning for young professionals. It presents a real-life case study of a young couple’s journey with the Lanteri Partners Group.

In an era where financial autonomy is highly prized, the narrative that younger generations, particularly millennials, are avoiding traditional financial advice in favour of do-it-yourself strategies has gained traction. However, this view overlooks a critical aspect of financial planning: its capacity to transform lives over the long term, something that Lanteri Partners Group has been witnessing as it diversifies its client base to include not just well-established or retired individuals but also ambitious young professionals.

The disconnect between perceived cost and the intrinsic value of financial advisory services has been a significant barrier. Many young professionals struggle to see beyond the immediate expense, failing to recognize the compound benefits of early, strategic financial planning. Superannuation, a cornerstone of financial security in later life, often goes underappreciated until it’s too late. This lack of foresight can result in missed opportunities to leverage one’s financial position for both current satisfaction and future prosperity.

Research from Findex highlights the substantial benefits of professional financial advice, noting a potential $664,000 difference in net assets by retirement for those who seek advice early. Despite recognizing the value of such guidance, a significant gap exists between appreciation and action, with cost cited as a major barrier. This perception challenges the financial industry to evolve, offering more accessible and relevant services to a generation standing on the precipice of a significant wealth transfer.

A Real-Life Transformation Journey

Consider the real-life journey of a young couple that engaged Financial Planning services at Lanteri Partners in their mid-30s. Initially sceptical about the value of financial advice, their perspective shifts as they engage in a tailored financial strategy.

Below is a real-life timeline based on this particular couple’s journey:

A Real Life Journey

This financial journey encompasses not just investment and superannuation optimization but also navigates through employment changes, property investments, and planning for their family’s future. Their story underscores the transformative power of personalized financial advice, illustrating how it can align with evolving life stages and financial goals, leading to significant growth and security.

The role of superannuation in this transformation cannot be overstated. As a critical component of long-term financial well-being, engaging with it strategically from an early stage can dramatically alter one’s financial landscape upon retirement. Yet, its importance is often overshadowed by more immediate financial concerns, underscoring the need for comprehensive financial education and advisory services that resonate with younger clients.

Demystifying Financial Advice

Addressing the cost-value paradox is crucial. By demonstrating the tangible benefits and long-term gains of professional financial planning, advisory firms can bridge the gap between perception and reality. The key lies in demystifying financial advice, making it accessible and relevant to a generation that stands to inherit significant wealth but may be ill-prepared to manage it effectively.

The narrative that millennials and younger generations are disengaged from traditional financial planning needs revisiting. Through the lens of evolving client demographics and the compelling journey of individuals who have reaped the benefits of early and strategic financial engagement, it’s clear that the value of financial advice transcends generational divides. For those willing to look beyond the immediate costs, the rewards of professional financial planning offer not just financial growth but a roadmap to achieving life’s milestones with confidence and clarity.

Interested in transforming your financial future? Lanteri Partners Financial Planning services are tailored to guide young professionals and seasoned investors alike.

Reach out to discover how our expertise can align with your financial goals. Contact us today.

Tarik Karama

During the quarter, global central banks signalled that interest rates had peaked and turned their focus to the possibility of interest rates cuts in 2024. In response, US bond yields fell from almost 5.0% to just below 4.0%, setting the tone for other countries to follow suit. This shift prompted investors to inject additional risk in their portfolios and increase their equity exposure.

Investors brushed aside near-term challenges such as, the developing Middle East conflict, inflation levels above central bank target levels and the potential for an economic recession. Instead, markets anticipated the prospect of a declining interest rate environment, a potential catalyst for global economic growth and adding impetus to corporate earnings as 2024 plays out.

We are being well rewarded in our interest-bearing assets, alleviating the need for additional risk at present. On a risk adjusted basis, both growth assets and interest-bearing assets are offering similar total returns, thereby justifying our defensive positioning with approximately 65%-70% growth assets and is smoothing out our return profile. The Capital Preservation Balanced model yielded a positive return of +4.4% during the quarter.

Anticipating a strengthening “interest rate tailwind” and considering the historical positivity associated with US election years, we foresee an improved market performance in the latter part of 2024. As the year progresses, the combination of these factors may propel markets forward, paving the way for solid portfolio returns. Looking ahead, we remain poised to explore increased exposure to growth assets, aligning with our commitment to optimising outcomes for our clients in the dynamic landscape ahead.

We continue to shape portfolios to optimise outcomes across asset classes within our overall risk parameters. In line with this, we executed the following changes during the quarter:

  • Our Investment Committee has reduced property exposure over a period of 18 months. Recently, income yields were being offset by property devaluations. In our view, the near to medium term outlook for the property sector would be a drag on our performance and as a result we sold the remaining property exposure across portfolios.
  • We partially switched exposure from the Realm Short Term Income Fund and PM Capital Enhanced Yield Fund to the Metrics Direct Income Fund (currently yielding over 9.0% pa.)
  • These moves will yield us a 3% p.a. extra income return, which is significant from our defensive interest-bearing investments.
  • We increased international equity weightings from 16.7% to 23.0%, through further investments in GQG Global Equity Fund and Aoris international Fund. Both funds are excellent out-performers and have added value for Lanteri clients in FY2024.
  • Following an unwarranted share price correction during 2023, we thought ResMed offered compelling long-term value and added it to portfolios. With expanding operating margins in the next two years, we believe profits and share price growth will exceed the market.
  • In Australia, we introduced the low-cost Vanguard High Yield ETF for a diversified company exposure supported by high dividends and franking credits. In the past 5 years this investment has produced after tax returns of 12.72% p.a. for super funds.
  • We have also been researching the Chemist Warehouse/Sigma proposed merger with a view to potentially taking a position at an attractive price in the coming quarter. This may represent a unique growth story over the long term.

The role of the Investment Committee

The Investment Committee, chaired by Michael Lanteri, includes a team of highly experienced professionals with a range of expertise, specialties and backgrounds who meet regularly to discuss investments, geopolitics, economic matters such as interest rates, property, superannuation, and tax.

The primary role of the Committee is to assist the Board in implementing Lanteri Partners Financial Management’s Investment Governance Framework and overseeing the development, selection, management, and monitoring of the model portfolios. The Committee is authorised to conduct research, activities and make recommendations to the Committee consistent with this Charter. It may engage independent counsel and other advisors as necessary and has the authority to require the attendance of and access to management, employees, and information essential for its functions. The Committee is responsible for ensuring adherence to the Investment Committee Charter, and any decision that would breach it must be referred to the group compliance officer. The Committee holds decision-making authority and responsibility for managing the model portfolio investments.

The Committee maintains a comprehensive Funds Management Standard Operating Procedure (SOP) manual outlining trading processes. This SOP empowers designated staff, in the absence of key Committee members, to execute necessary changes to the investment portfolio. Regular reviews of the SOP, coupled with training sessions for relevant personnel, ensure a swift and coordinated response in the face of unexpected events, safeguarding the continuity and integrity of investment activities.

Yours sincerely,
Lanteri Partners Investment Committee

After a solid start to the quarter, markets gradually drifted lower toward the end of the September as 10-year bond yields in Australia and the US continued on an upward trajectory. Investors began to re-assess the valuation of equities and contemplated the heightened likelihood of a modest economic downturn in both Australia and overseas in 2024. 

Oil prices rose 20% during the quarter and the outbreak of the Israel-Palestine conflict has added near-term uncertainty prompting investors to seek temporary safe havens such as gold and the US dollar. Furthermore, Inflation has persisted above central bank target levels, indicating the possibility of prolonged elevated interest rates. 

In the past year we strategically positioned portfolios to take advantage of rising interest rates. When we look at returns over a longer period, Balanced portfolios earned +10.3% in the year to September 2023, reaffirming that it is always important to look at returns from a longer-term perspective.  

Markets are becoming increasingly “data centric” a trend which may provide temporary shifts in expectations and create “pockets of weakness”, which we may be able to exploit during the coming year to add value. 

We have ensured our interest-bearing investments primarily include “short duration” assets, which has allowed us to benefit from the rising interest rate environment and has resulted in attractive yields. Currently, the Realm Short Term Income Fund and PM Capital Enhanced Yield Fund are providing us with an approximate 6.0% per annum return, whilst the Metrics Direct Income Fund is generating an 8.5% per annum return. As such, this asset class is offering a return we have not witnessed in several years. 

The standout performer in portfolios has been the GQG Global Equity Fund, largely due to its substantial allocations in Technology, Healthcare and Energy Sectors. Impressively the fund has already gained 8.8% this financial year, a stark contrast to the -2.7% return of the MSCI World Index. This remarkable outperformance over such a brief timeframe has led our Investment Committee to approve further investment in this fund during periods of market weakness. 

Whilst it is possible that economies may cool sufficiently to allow central banks to start lowering rates and prevent a recession, historical patterns demonstrate that interest rate rises usually overshoot and lead to recessions. The sharp global monetary tightening may have a lagged effect thereby impacting global economies in the months ahead. Under the current circumstances, the probability of a mild recession in 2024 is rising.   

 Whilst Australian economic growth is decelerating, the immigration fuelled population growth in the next 12 -18 months (extra 2% of the population), should provide a healthy economic buffer. There are indications that the Reserve Bank is nearing the end of its interest rate tightening cycle. However, with inflation at 5.2%, an RBA interest rate cut may be a long way off. 

 The UK is stagnating, and several Eurozone countries are flirting with recession. After a strong performance earlier in 2023, share markets in the region are now flatlining weighed down by aggressive central bank monetary policy tightening. 

 China is not providing the demand offset to a potential global slowdown we were anticipating as it struggles to regain momentum post Covid. Consumer confidence, demand and spending are sluggish, whilst debt and property market problems continue. Stronger policy responses are needed to re-establish its growth path.  

 Consensus expectations anticipate a rebound in corporate earnings next year and interest-rate markets are pricing in the potential for moderate central bank easing in a range of countries in 2024.  

With central banks having raised interest rates over the past 18 months, the most important question remains, can they now engineer a soft landing?  

 In our view, we feel it is prudent to maintain a capital preservation strategy with growth assets in the 65%-70% range and only increase exposure when the risk/return parameters are in our favour. 

Risk, a concept that has plagued and perplexed humanity for centuries, remains a complex and multifaceted study. Nobel Prizes have been awarded to those who could provide elegant solutions to the intricate puzzle of risk. While risk management is commonly seen as the effort to address negative or harmful risks, fundamentally, it is the recognition of the potential that any unknown circumstances may materialise. In the realm of finance, the understanding of risk extends beyond downside risk to encompass upside risk, recognising that both outcomes are unknown.

 

Risk as the Unknown

In essence, risk is an intellectual attempt to grapple with the uncertainties of the future. Its complexity is directly linked to the amount of information available.  

Consider the scenario of a blindfolded individual standing on the edge of a street, tasked with crossing safely. The risk of being hit by a passing car is so great that attempting to cross becomes perilous. Removing the blindfold transforms the situation from highly risky to low risk, highlighting the critical role of information in risk assessment. 

Road or Pedestrian: Identifying the True Source of Risk

In this scenario, the question arises: What element impacted risk the most—the road or the pedestrian crossing it? This analogy draws parallels with the finance world, where risk is often linked to investments or products. However, the real source of risk lies in the investor’s knowledge about the investment or industry. Just as opening the eyes of the blindfolded pedestrian drastically reduces the risk of crossing the road, an investor’s awareness and understanding significantly mitigate the risks associated with an investment. 

Warren Buffett's Approach

Drawing inspiration from renowned investor Warren Buffett, we find a practical application of this concept. Buffett’s core tenet is investing in assets within his scope of competence. In other words, he only crosses roads that he is confident he can navigate safely. This approach distinguishes his investment decisions from those made by individuals with different levels of information and expertise. 

This distinction emphasises that, while the investment might seem identical on the surface, the information processing and risk perception between an astute investor like Buffett and an average investor differ significantly. 

Education as a Risk Mitigator

At Medici Invest, we place a significant emphasis on education. Heightened education opens an individuals’ world and enhances their confidence to act. By providing a deeper understanding of investments, industries, and markets, we empower individuals to manage risk in their life more effectively. The calculations that once held them back become more manageable, allowing them to navigate the complex roads of finance with confidence. 

Risk, often seen as an insurmountable challenge, becomes a navigable terrain with the right information and education. The road to financial success is paved with informed decisions, and at Medici Invest, we strive to guide individuals in crossing these roads with confidence and competence.

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