Downing Global Investors – profiting from the global middle class

Downing LLP is the Investment Manager and Sponsor of the VT Downing Global Investors Funds. From time-to-time Downing LLP will commission specific articles to be written about the fund, on our behalf.  Where applicable disclosure of conflicts will be provided. Downing LLP has commissioned Fairview Investing to provide fund commentary and opinion in this instance. Persons affiliated with Fairview Investing are deemed to be affiliated persons of Downing LLP.



One of the most iconic sketches in TV comedy was the John Cleese, Ronnie Barker, and Ronnie Corbett class system sketch from the The Frost Report in 1966. Ronnie Barker is the “vulgar” middle class man with money who looks up to upper class, but poor, John Cleese and down on working class Ronnie Corbett. You may wonder why I am starting an article about investing with mention of a TV sketch 55 years old; the simple answer is this article is all about the middle class.

The meaning of middle class for investing purposes is people who have disposable income left over each week or month to spend on discretionary items. Using this definition, someone in the UK earning £50,000 each year could be middle class, as could a Chinese person earning £15,000 per annum and a Nigerian on £8,000. By the way, GDP per capita in Nigeria was $2200 in 2019, $10,000 in China, and $42,000 in the UK.


How many middle-class people do you know? 10, 50, 200? It may surprise you to learn there are an estimated 3.3 billion middle class people today on planet earth and this group is set to grow to 5.5 billion by the end of the decade. Many of these new middle-class spenders will be from the emerging markets. It is this huge burgeoning part of the global population that Anthony Eaton, manager of the VT Downing Global Investors (DGI) fund, is targeting.


DGI was launched at the height of market turmoil last March and exploited the strong recovery, gaining 60% at the time of writing. Timing can be everything in investment! Before we come on to what Anthony is doing with this fund it’s worth talking of his past and the evolution to get to this point.


He launched his previous fund 16 years ago as a "big picture", thematic fund, with a relatively straightforward theme. At that point Anthony invested in companies set to benefit from global industrialisation and urbanisation. He believed demand for energy, infrastructure and commodities would be substantial in order for the developed world to maintain levels of consumption and to cater for rapid progress in developing nations (such as China, Brazil and India). He therefore invested in firms able to supply the essential raw materials, goods and services that accompany urbanisation and economic growth.


Now it might be pertinent to ask what this has to do with middle-class spending. The simple answer is that the theme of today’s fund is a natural evolution of the phenomenon Anthony engaged with 16 years ago. Urbanisation and globalisation are increasing income per head on a broadening and more inclusive basis worldwide. More disposable income amongst a multiplying middle-class population ratchets up demand for higher margin goods and services. Anthony invests in companies that supply the needs and wants of this demographic.


There are six key, and evolving themes, within the fund: healthcare, transition from carbon, 5G, digitalisation, consumer goods, food and raw materials. The common link is the driver of all these markets; rising middle class demand.


Anthony Eaton believes most of return is driven from top down asset allocation. He is constantly looking for recurring patterns of capital formation. Classic “applied capitalism” if you like. He identifies sectors attracting investment, both on the ground and through valuation in listed markets, and then typically, seeks out the leaders, or winners, in those groups. He wants the winners of today not tomorrow, as they are more reliable. Normally he will look to buy a few companies in each area to spread the stock specific risk.


As an example of when he won’t buy something Anthony highlighted Unilever, which he says is a great business and taps brilliantly into rising income levels in emerging markets as well as being a stalwart in developed markets. The simple problem in his view is that it has been a terrible share and the market isn’t interested in it today. Capital is being drawn to other areas. A business like Unilever does fit into the thematic approach pf the fund and Anthony would want to engage should sentiment or conditions improve.


This isn’t a traditional developed markets or emerging markets fund, it’s a true global fund that sees the global middle class as a single homogenous entity and caters to its ‘needs and wants’. Today it has about 40% invested in the US, 30% in Europe and 30% in Asia, but Anthony believes over time the US proportion will decrease in favour of a rising allocation to Asia. The fund’s exposure to India, for example, is gradually rising as businesses of scale emerge.


Finally, Anthony Eaton thinks this is the most exciting period ever in his investment career. The combination of financial pump priming of developing countries through trade, their vast populations, leaps in productivity and inclusiveness offered by digitalisation, ample supplies of affordable money and the rapid emergence of brand new massive scale industries (decarbonised energy for example) make for a fascinating decade for companies with global reach and desirable products.

Ben Yearsley

Fairview Investing Ltd 9 February 2021


To find out more about  the VT Downing Global Investors Fund, visit www.downingglobalinvestors.com

Important Information

This document is produced by Fairview Investing Ltd, an independent research consultancy. The content is for information purposes only and does not constitute financial advice. The commentary or research provided do not constitute a personal recommendation to deal. Any statements, opinions, forecasts, and figures are made by Fairview Investing (unless otherwise stated). They are considered to be reliable at the time of writing but may be subject to change.

Fairview Investing accepts no legal responsibility or liability for the content of this material. The contents of the document are not to be re-produced or circulated without the express permission of Fairview Investing Ltd.


This document constitutes a financial promotion relating to shares in the VT Downing Global Investors Fund ("the Fund"), which has been approved by Downing LLP, a firm authorised and regulated by the Financial Conduct Authority (FCA) for the purposes of Section 21 of the UK's Financial Services and Markets Act 2000 in accordance with the FCA's Rules relating to "financial promotions".

This document has been prepared solely for the information of the person to whom it has been delivered. The information contained herein is strictly confidential and is only for the use of the person to whom it is sent. The information contained herein may not be reproduced, distributed or published by any recipient for any purpose without prior written consent.

This information is not intended to provide and should not be relied upon for accounting, legal or tax advice or investment recommendations. You should consult your tax, legal, accounting or other advisers about the issues discussed. 


Risk warning: Please note that past performance is not a reliable indicator of future results. Capital is at risk. Investments and the income derived from them can fall as well as rise and investors may not get back the full amount invested. Investments in this fund should be held for the long term and are higher risk compared to investments solely in larger, more established companies. Diversification may not be achieved and investments may be in the same sector. Opinions expressed represent the views of Fairview investing at the time of publication, are subject to change, and should not be interpreted as investment advice. Please refer to the latest full Prospectus and KIID before investing; your attention is drawn to the risk, fees and taxation factors contained in these documents.


Important notice: This document is intended for retail investors and their advisers and has been approved and issued as a financial promotion under the Financial Services and Markets Act 2000 by Downing LLP (“Downing”). This document is for information only and does not form part of a direct offer or invitation to purchase, subscribe for or dispose of securities and no reliance should be placed on it for these purposes. Downing does not offer investment or tax advice, or make recommendations regarding investments. Downing is authorised and regulated by the Financial Conduct Authority (Firm Reference No. 545025). Registered in England No. OC341575. Registered Office: St Magnus House, 3 Lower Thames Street, London EC3R 6HD.