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DIY Investor Magazine
/
September 2016
MORE THAN JUST ‘TOUCH AND GO’
Electronic payments in all formats are increasing,
whether it be swipe technology, chip and pin, or more
modern NFC-based (near field communications) touch
and go technology – either via a bank card or a mobile
device with pre-loaded bank card credentials. Mobile
phone-based financial services are allowing people
to bank without a formal bank account. For example,
branchless banking service M-Pesa, which operates
in developing countries such as Kenya, India and
Afghanistan, allows users to send secured SMS text
messages to pay for goods and services. Customers
can also deposit or withdraw funds from a network of
banking agents, which include retail outlets and airtime
resellers. The system also serves to reduce fraud and
is important for many developing countries as the trade
across this banking system can be included in GDP
calculations.
VISA AND MASTERCARD
Notable holdings for the portfolio include the leading
global payment networks, Visa and Mastercard.
Alex and the team think both companies have
exceptional financial track records since their initial
public offerings in 2006 and 2008 respectively.
The companies have high barriers to entry – how
difficult it is for potential competitors to enter the market
– and most new payment options will be run on Visa/
Mastercard’s networks. Furthermore strong long-term
growth appears underpinned by a move away from
cash.
WEX
WEX, the US-based corporate payment solutions
provider, is another notable holding. They have
been consolidating the fragmented vehicle fleet and
fuel payment system in the North American market,
and replicating this success elsewhere. They have
diversified into other specialised payment areas
including virtual cards, food cards and travel and
healthcare, and have a track record of strong revenue
growth. We also have a significant position in Apple,
but at present payments revenues remain a very small
percentage of this business. Apple clearly has an
important part to play in the payments industry, as it is
seen to be a leader in NFC-based mobile payments,
but our investment case for holding the stock is not
currently based on the strength of the Apple Pay
offering.So with 85% of the globe still using cash – Alex
and the team think this is an investment theme for the
long-term.
The above example is intended for illustrative purposes only and is not indicative of the historical or future performance of the strategy or the chances of success of any particular
strategy. Henderson Global Investors, one of its affiliated advisors, or its employees, may have a position mentioned in the securities mentioned in the report. References made to
individual securities should not constitute or form part of any offer or solicitation to issue, sell, subscribe or purchase the security.
Before investing in an investment trust referred to in this document, you should satisfy yourself as to its suitability and the risks involved, you may wish to consult a financial adviser.
The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested.
Nothing in this document is intended to or should be construed as advice. This document is not a recommendation to sell or purchase any investment. It does not form part of any
contract for the sale or purchase of any investment.
Issued in the UK by Henderson Global Investors. Henderson Global Investors is the name under which Henderson Global Investors Limited (reg. no. 906355), Henderson Fund
Management Limited (reg. no. 2607112), Henderson Investment Funds Limited (reg. no. 2678531), Henderson Investment Management Limited (reg. no. 1795354), AlphaGen Capital
Limited (reg. no. 962757), Henderson Equity Partners Limited (reg. no.2606646), Gartmore Investment Limited (reg. no. 1508030), (each incorporated and registered in England and
Wales with registered office at 201 Bishopsgate, London EC2M 3AE) are authorised and regulated by the Financial Conduct Authority to provide investment products and services.
Questioning the Manager – Alex Crooke, The Bankers Investment Trust
