Junk Food Gives Relief From Negative Yields, Hedge Fund Says
Junk Food Offers Escape From Negative Yields, Hedge Fund Says
(Bloomberg) -- People’s love of burgers, chocolate and makeup offers investors the best bet for growth and income, according to a former Goldman Sachs Group Inc. executive who runs a hedge fund from London.
Infusive Asset Management Inc. seeks to harness “deep-rooted human impulses,” it’s Chief Executive Officer Andrea Ruggeri said in a phone interview, by buying shares in companies that indulge them.
These stocks offer potential for growth because they cater to a thriving market in self-indulgence. Many also pay dividends, which make them attractive to income-seeking investors at a time of monetary policy designed to keep borrowing costs as low as possible, according to Ruggeri, who helps oversee $220 million.
“In this environment of zero or negative interest rates, growth stocks, non-cyclical with steady dividends and superior cash flow, could be viewed as a substitute of what used to be the fixed-income component,” he said.
The world’s stock of negative-yielding bonds is now approaching $16 trillion as central banks pile on stimulus to help economies weather the fallout of the coronavirus pandemic. That trend is forcing investors to look at alternatives, such as dividend-paying shares -- to replace lost returns.
Elicit Joy
“The strategy is particularly well-suited to this environment but there is a broader shift in place,” said Ruggeri, who spent more than 20 years at Goldman Sachs Group Inc and works for Infusive from London.
Infusive focuses on consumer-focused investments based on the insight that people repetitively buy certain products.
“Consumers prefer to purchase products that elicit joy and make them happy,” it says on its website.
©2020 Bloomberg L.P.