Industrials

Jack Drew
The industrials sector is often perceived as a barometer for the health of the broader economy. The Global Equity Income Fund currently holds 9 high-quality Industrials names spanning from power management to grid infrastructure, air compressors to robotics and even niche fields including aerospace components and dishwashers. These account for roughly a quarter of the portfolio and is our second largest sector overweight.

The past 24 months have generally been a favourable set up for Industrials, with sector returns outpacing the MSCI World over this period. The tailwinds have included growing trade protectionism, which has driven manufacturing capabilities in key industries back onshore. A substantial increase in government spending on large infrastructure projects which has supported demand over a multi-year cycle. And, of course, this is all amidst the AI boom, which has prompted widespread investment into both datacenter infrastructure but also the broader electrical grid, which is vital in powering it.

But, despite the supportive backdrop, the Industrial subsegments have not all benefited equally. Split across capital goods, transport and commercial & professional services, each of these areas have substantially different growth and quality characteristics. This has translated into different equity performance and, in our view, has made some parts of the sector more desirable than others. In our latest sector deepdive, we explore this divide in more detail, we outline the current market set up and we also look forward to the potential catalysts that are shaping demand and will likely play a key role in driving future equity performance.