Despite the comeback of value shares, one fund manager is convinced structural shifts from COVID-19 will make certain growth shares ultimate winners.
Tribeca Investment Partners portfolio manager Jun Bei Liu said on Tuesday that growth stocks might be "a little but out of favour" currently – but you can't afford not to hold some of them.
"My view is that a portfolio will always have to have structural winners – because they will future-proof your portfolio."
Liu explained at the GSFM briefing that corporate earnings had been decreasing in the 10 years before the pandemic.
"It's been declining for many, many decades. So the structural winners will always command a premium."
The threat of rising interest rates on growth stocks was over-emphasised, according to Liu.
"'Yes, it might tick up a little bit higher. But look how low it is [historically]," she said.
"It is still at a 3-decade low… And we don't see that interest rate escalating to anything more meaningful in the next few years."
4 structural winners that Jun Bei Liu likes
The current environment is conducive for buying into many of those structural growth stocks, but Liu advised investors to be "tactical".
"Pick them up on days when people feel the need to buy other themes."
As for some examples, she picked out 4 ASX stocks as structural growth winners:
"We like market leaders. We like companies that have a demonstrable track record, as well as a continually growing Total Addressable Market around the world," said Liu.
"Nuix offers enormous exposure to big data, cloud, security – quite a lot of those spaces that are normally untappable for an Australian investor. It's very very exciting."
Liu admitted art commercialisation platform Redbubble did benefit from the coronavirus pandemic somewhat, but still likes what she sees.
"It's trading at a steep discount to what the global company Etsy Inc (NASDAQ: ETSY) is trading on. It has a very strong management team… and we see that going on a significant growth path."
Afterpay invented the entire buy now, pay later sub-sector by itself, Liu told The Motley Fool last month.
"This is a sector where you actually see a lot of corporate and institutions' interest now into that space. We take a very long-term view with this business and short term sell-off is really providing buying opportunities."
Overall Liu this week was optimistic about the coming year.
"I think in 2021 we will see our equity market deliver at least 10% return. A big part of that will be dividends – however, we should see some of the best growth yet."
