Experiences rather than tangible goods are proving the most popular investment among millennials, with technology able to cater for this demand set to soar.
'Millennials typically have much more desire for experiences rather than traditional procurements of goods and services and obviously with the advent of social media, if it wasn’t shared it didn’t happen.’
In a recent fund overview, Rubenstein said technology was proving an integral theme for US investors, as there had been a boom in several areas of internet and internet-related stocks.
‘Some of the key trends we are observing in the technology space is the re definition of the enterprise data centre. The obliquity of wireless devices and the explosion of the internet of things and the rising importance of security at all levels of the enterprise.’
The $225 million New Capital US Growth fund, which was recently brought in-house by Swiss group EFG, is currently overweight technology and consumer discretionary stocks, while underweight consumer staples and financials.
Focusing more broadly, Rubenstein said his long-term outlook for the US equity market is constructive and heavily led by ‘disruptive’ developments across several sectors.
‘Certainly the overall environment is one of relatively low growth, but we’re finding several pockets of disruptive technology, disruptive consumer discretionary companies and disruptive financial technology companies and some industrial companies that are benefiting from the current environment.’
Rubenstein said one of the trends is the e-commerce shift. ‘The on-going shift in the consumer sector to e-commerce channels is breaking away from traditional brick and mortar retail.’
This comes after Citywire + rated Adrian Daniel said that online demand and digitalisation of consumption is one of the few areas where the economy is experiencing structural growth.
However, in the April update for the fund, Rubenstein said technology was the largest short-term detractor to performance in the portfolio and was down 5% in April.
In the commentary Rubenstein is positive about exposure to semiconductor manufacturing company Skyworks. The Massachusetts-based company underperformed during the month, as a challenging industry environment limited upside in the quarter and led to a softer than expected near-term outlook.
‘While June is likely to remain a transitional quarter ahead of meaningful product launches in the second half of the year, we retained our overweight position in Skyworks given the company’s continued sharp execution, growing market share and content on key platforms, and our expectation for strong earnings leverage in subsequent quarters.’
The New Capital US Growth fund returned 38.8% in US dollar terms over the three years to the end of May 2016. This compares to a 43% rise by the MSCI USA Growth TR USD over the same period.