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Origin of Sarasin fund species

Sarasin is launching survival of the fittest as a new investment strategy to run alongside its other thematic investment strategies for the management of its EquiSar and Global Sar funds.

Sarasin, which claims to have invented global thematic investment, says the new Darwinist flavour will aim to invest in the financially strongest companies throughout the world.

Sarasin predicts that the companies which are likely to do well in this theme are those with strong balance sheets and lower capital costs.

It says these companies are likely to come from three areas – those that have done well in hard-hit areas such as airlines where the competition will be weakened, companies such as pharmaceuticals where cashflow is necessary for competitive advantage to fund research and development, and capital-rich companies such as insurance companies which rely on balance-sheet strength.

It says these companies are well placed to do well in the current climate and due to the nature of the biggest recession which saw the biggest falls for 45 years in US corporate profits. Given the current credit climate, it says borrowing or bond issuance is punitively high, especially for companies with poor credit ratings.

Chief investment officer Guy Monson says: “Perhaps the defining feature lying ahead will be the power of a strong balance sheet. Of course, the late 90s were the years of the growth manager and 2000/01 was the revenge period for the value manager. I envisage 2002 being the year of the balance sheet. It will be companies with superior bal- ance sheets and access to capital markets at the lowest funding costs who will dominate their peer group.

“In this climate, the strong will get stronger and I expect this to manifest itself ultimately in the form a superior share price performance.”

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