Artemis’ words of the year

Our words of the year didn’t originate on Instagram or TikTok and are unlikely to be used by young and trendy influencers. But they sum up 2023 for our fund managers and could help investors make sense of markets as we head into 2024.

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Oxford University Press recently announced its word of the year is ‘rizz’, defined as “style, charm or attractiveness” – none of which could be readily associated with the performance of most investment markets over the past few years.

Yet certain areas have managed to throw off the shackles over the past 12 months and there are reasons to be cautiously optimistic that others could soon follow.

Here, Artemis looks back at its own ‘words of the year’ that have summed up 2023 and could help investors make sense of markets as we head into 2024.

Experiential

According to the Oxford English Dictionary, ‘experiential’ is an adjective meaning: “Of or pertaining to experience or observation; based on or derived from experience.”

Experiential consumption helps to describe changing consumer habits as they move from spending on goods to experiences, across all income brackets.

Delivering an exceptional customer experience is vital for the companies held in the Artemis Leading Consumer Brands Fund, which typically aim to curate a feeling or a community around their product or service. This means creating memorable interactions that stay with consumers and cultivate loyalty.

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NIM (net interest margin)

Banks make money through net interest margins (NIMs) – the difference between what they charge borrowers for loans (bank assets) and what they pay depositors (bank liabilities). The era of ultra-low interest rate policies limited banks’ ability to make money this way.

Now, the normalisation of interest rates has improved NIMs, increasing profitability – but this is yet to be reflected in valuations. This is one of the reasons why Ambrose Faulks, co-manager of the Artemis UK Select Fund, believes it may be time to reappraise the unloved banking sector.

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Golden share

This is not technically a word and as a concept it is one that investors in listed companies are unlikely to ever see in practice. However, the concept of ‘the golden share’ – meaning the last remaining share in a company after all others have been bought via buybacks – is useful in describing what could potentially happen when the market does not respond to a rapidly falling share count in a company that is already trading cheaply relative to earnings.

Nick Shenton, co-manager of the Artemis Income Fund, says that in effect, such a company will “begin to eat itself”.

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Important information
The intention of Artemis’ ‘investment insights’ articles is to present objective news, information, data and guidance on finance topics drawn from a diverse collection of sources. Content is not intended to provide tax, legal, insurance or investment advice and should not be construed as an offer to sell, a solicitation of an offer to buy, or a recommendation for any security or investment by Artemis or any third-party. Potential investors should consider the need for independent financial advice. Any research or analysis has been procured by Artemis for its own use and may be acted on in that connection. The contents of articles are based on sources of information believed to be reliable; however, save to the extent required by applicable law or regulations, no guarantee, warranty or representation is given as to its accuracy or completeness. Any forward-looking statements are based on Artemis’ current opinions, expectations and projections. Articles are provided to you only incidentally, and any opinions expressed are subject to change without notice. The source for all data is Artemis, unless stated otherwise. The value of an investment, and any income from it, can fall as well as rise as a result of market and currency fluctuations and you may not get back the amount originally invested.