Junk Food Gives Relief 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.

Its holdings include Nestle SA, the maker of KitKat and Aero chocolate bars, McDonald's Corporation, and cosmetics firm L'Oreal, whose brands include Lancome perfumes and Maybelline make-up.

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.