Hantoo Asset Management's Inflation Investment Solution... Pricing Power Is Key

[Asia Economy Reporter Junho Hwang] Korea Investment Management announced on the 28th that in the current inflationary environment, it is necessary to pay attention to products that invest in companies with pricing power that can raise selling prices without concerns about a decline in consumer demand.

KIM's 'KINDEX Global Brand TOP10 Bloomberg Listed Index Fund (ETF)' is a product that invests only in the top companies in the world's 10 major sectors, characterized by investing only in companies with low concerns about demand decline.

This product invests 10% each in apparel & textiles (Louis Vuitton Moet Hennessy, LVMH), food & beverages (Coca-Cola), household goods (Procter & Gamble, P&G), banking (JPMorgan Chase), entertainment (Activision Blizzard), hardware tech (Apple), semiconductors (NVIDIA), software (Microsoft), biopharmaceuticals (Pfizer), and automobiles (Tesla).

They also recommended the 'KINDEX US Wide Moat Value Stock ETF,' which invests in U.S. companies that have both long-term sustainable competitive advantages and undervaluation appeal. This product invests in companies with market dominance in each industry such as Walt Disney, Boeing, Amazon, Alphabet, Microsoft, and Kellogg. Investment guru Warren Buffett likened a company's ability to maintain competitive advantages in a fierce competitive environment to an 'Economic Moat' and emphasized investing in companies with a Wide Moat. Pricing power is a key metric Buffett uses to evaluate companies.

As fund products, they recommended the 'Korea Investment Global Brand Power Fund' and the 'Korea Investment Sustainable US Wide Moat Fund.'

The 'Korea Investment Global Brand Power Fund' diversifies investments in advanced country power brand companies with loyal consumer bases worldwide. As of last month, it had high investment proportions in Apple, Microsoft, TotalEnergies SE, Alstom, and Shell. The 'Korea Investment Sustainable US Wide Moat Fund' invests in U.S. companies with high sustainability of competitive advantages that meet ESG (Environmental, Social, Governance) criteria and whose stock prices are low relative to fair value. It invests in stocks selected by more than 100 analysts at Morningstar who evaluate competitive advantages by industry.

Shim Jaehwan, Chief Investment Officer (CIO) of Korea Investment Management, said, "Strong competitive advantages and the pricing power based on them are essential for companies to survive and grow in a phase where cost pressures increase due to rising interest rates. Considering that the more challenging the business environment, the more companies with weak fundamentals are eliminated and a few competitive companies dominate the entire industry in a 'winner-takes-all' phenomenon, it is necessary to pay attention to products that invest in high-quality companies with market dominance."

This content was produced with the assistance of AI translation services.