Annabelle Miller

Companies with heavy assets and low obsolescence (HALO) are emerging as the next big investment theme, following the disruption caused by AI disruption in asset-light sectors, according to principal, investment at ECP Asset Management, Annabelle Miller.

“In recent years, asset-light companies such as software and services demonstrated the ability to generate revenue and accelerate growth without the need for physical assets and infrastructure.

“AI has proven it can easily disrupt companies built on intangible intellectual property particularly in the software space. But what AI cannot do is disrupt those businesses which monetise services through a scaled physical asset or piece of infrastructure. Think about pipelines, powerlines or businesses monetising large installed bases of equipment,” she says.

Miller says there are several sectors where ‘HALO’ opportunities exist, including logistics and salvage, industrial engineering, life sciences, semiconductors, material and mining and consumer staples.

“As AI continues to disrupt, there are companies which investors should consider that have low risk of AI replication or disruption and high barriers to entry. Furthermore, many of these businesses will benefit from integrating AI tools into their workflows to improve efficiency and productivity of their physical asset base.

“One example in the life sciences space is Sartorius Stedim Biotech (EPA: DIM). The company owns high-security and ultra regulated physical spaces in France and Korea where drugs are manufactured. The company itself doesn’t produce drugs, rather it partners with drug companies at the earliest stages of development to assist in the manufacturing process for an emerging drug molecule.

“From the earliest stages of clinical development all the way through to commercial production, Sartorius’ equipment and consumables are specified in the drug master file for each drug processed in its facility. These drug master files are approved by the relevant regulatory body embedding Sartorius in the manufacturing process and making switching almost impossible.

“This company too is resilient to AI as no matter how many drugs AI formulates, a facility is still needed for production of the physical drugs.”

In the semiconductor space Taiwan Semiconductor Manufacturing Company (TPE: 2330) is an example of a critical utility in the technology landscape. It has a monopoly in the manufacture and development of advanced semiconductors used for everything from smartphones to the next-generation AI data centres, says Miller.

“While semiconductor designs change, the need for a high end foundry does not. TSMC is entrenched in their customer’s product roadmaps, locking them into their physical manufacturing ecosystem.

“The TSMC ‘way’ is grounded in physics and chemistry, developed and refined over years, making it virtually impossible for competitors to replicate and is resilient to AI disruption. More likely we will see the company’s growth accelerate with the growth and expansion of AI.”

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Mr Warton joined ECP in 2021 as principle, investments. Prior to ECP, he spent seven years at First Sentier Investors in a number of investment roles, including as a member of the Emerging Companies team in Sydney and the Global Infrastructure team in London.

ECP Asset Management founder, Dr Manny Pohl, says Mr Warton’s promotion reflects his excellent track record and commitment to delivering positive outcomes for clients.

“Justin has been an integral member of the team since he joined, and has made a significant contribution to ECP. Justin’s promotion to partner recognises that he has been a key driver of the business and will continue to be a part of the firm’s long-term success,” says Dr Pohl.

The ECP Global Growth Fund has recently been added to the HUB24 platform giving investors greater access to opportunities in global companies. It also celebrated its 5-year track record this month.

“The ECP Global Growth Fund’s investment strategy is grounded in the belief that the underlying economics of a business drive long-term investment returns. The portfolio is constructed from high quality franchises, with a sustainable competitive advantage and aims to deliver superior long-term performance,” says Dr Pohl.

“Our portfolio represents a collection of exceptional businesses operating across a range of industries and geographies, as well as up-and-down the market cap spectrum,” says Mr Warton.

“Pleasingly, over the course of the Fund’s life, we have demonstrated particular ability to deliver outperformance through the identification of high quality franchises in the smaller, off-benchmark, and more under-covered parts of the market, and have grown with them as shareholders. Cross-border money movement platform Wise PLC (AIM:WISE), tabletop gaming manufacturer Games Workshop (LSE:GAW), and digital advertising platform AppLovin Corp (NASDAQ:APP) are standout examples of this,” he says.

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Annabelle Miller

As Nvidia hits fresh record highs based on strong sales of its advanced computer chips, Annabelle Miller, principle, investments at ECP Asset Management, says Taiwan Semiconductor Manufacturing Company (TSMC) is the standout investment opportunity in artificial intelligence (AI) computing.

Nvidia recently announced a US$5 billion investment in Intel as a strategic move to allow it entry into the AI data centre market while supporting US government efforts to onshore computer chip production away from Asia. The collaboration combines Nvidia’s accelerated computer chips, or graphics processing units (GPUs) which power AI, with Intel’s central processing units (CPUs), which are the brains behind personal computers. For Intel, the investment essentially provides a much-needed infusion of capital, according to Ms Miller.

“This is not a foundry deal but rather just badly needed US$5 billion in cash for Intel. Intel’s real issue is its small scale, high cost and poor execution of its foundry. This deal ultimately tells us that Nvidia still has a strong preference for TSMCs foundry and technical excellence. Further, it is likely that Nvidia is providing this investment to quell pressure from the US government,” she said.

Ms Miller favours TSMC over Nvidia for the strong growth opportunities the Taiwanese company offers and its strategic position near Asian computer chip suppliers. The company will be a key beneficiary of the growth of the AI infrastructure market, estimated by Nvidia’s Jensen Huang to grow from $600 billion to $3-$4 trillion by 2030. This huge growth will create upside for TSMC’s medium-term revenue growth from 2026, Ms Miller says.

“Our preferred way to invest in AI computing is through TSMC. They’ve got the technological superiority currently and huge expected growth in revenues. TSMC has a 40 per cent five-year CAGR for AI products, but also when you look at their competitive advantages, its geographical concentration in Taiwan and being so close to its suppliers is important too,” she said.

“If TSMC has an outage at a manufacturing facility at 2am in the morning, they can just ring up their supplier which is five minutes’ drive away and the problem can be quickly fixed. So, it is these kinds of little nuances that provide us with the comfort that TSMC is the right way to go in terms of investment,” she said.

Ms Miller is less optimistic about Intel, despite Nvidia’s significant investment. “Intel has a lot of struggles to overcome in terms of fixing its foundry business, as evidenced by the fact it outsources a portion of its leading-edge node production to TSMC,” she said.

As for China’s recent ban on Nvidia GPUs and the emergence of competitors in Huawei, DeepSeek and Alibaba, Ms Miller says it is possible that China could catch up to the US and Nvidia in terms of GPU production.

“China’s move to ban Nvidia chips as a longer-term strategic move to develop their own industry and move away from reliance on TSMC. You’ve already seen companies like Huawei claim technologically superiority or at least being in line with Nvidia in their latest AI product roadmap. While it’s a war of words at this stage, and the proof will be in the pudding, as we saw earlier in the year with the DeepSeek moment, it’s not out of the realms of possibility that China is leaping ahead in the AI race,” she said.

“Either way, whoever wins the end market is going to have to make the majority of their chips with TSMC,” she said.

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Annabelle Miller

ECP Asset Management’s Global Growth Fund has been selected as the latest partner of Future Generation Women.

Annabelle Miller, principal at ECP Asset Management, will provide pro bono investment support for global equities, joining the select group of female investment managers.

Future Generation Women’s investment objectives are to provide investors with a combination of income and capital growth over the medium-to-long term. The fund invests in Australian and global equities, and consists of a balanced mixture of various Australian and global equity strategies, now including the ECP Global Growth Fund.

The ECP Global Growth Fund is a high-conviction, global equity fund focused on investing in high-quality growth businesses. The ECP Global Growth Fund’s portfolio is constructed of high-quality franchises, excluding those companies who do not have a sustainable competitive advantage.

Ms Miller said: “Future Generation Women’s mission to drive eclose the gender gap in Australia and support not-for-profits that are driving economic equality, resonates well with ECP’s values”.

“Becoming a partner to Future Generation, gives us the opportunity to contribute to a fund that not only seeks strong returns but also actively works to improve the lives of women and their children. We are looking forward to making a meaningful impact to the fund and its purpose, and ensuring the investment objectives of the fund continue to excel.”

Caroline Gurney, Future Generation chief executive officer said: “Future Generation Women represents the next frontier in investing for impact, bringing a gender lens into investment decisions. We welcome Annabelle Miller and the ECP Global Growth Fund as our newest partner to our fund. The addition of the ECP Global Growth Fund strengthens our investment portfolio and allows Future Generation Women to further our mission of driving gender equality through investments and philanthropy.”

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Annabelle Miller

Despite investors starting to show some concerns about the share prices of tech companies such as Microsoft, Amazon, Google and Meta, these fears should not be overblown, says Annabelle Miller, principle – investments at ECP Asset Management.

“Earlier this year, investors showed some consternation following the release of DeepSeek and its impact on companies such as Nvidia and others in the “Magnificent Seven”. This coincided with a deceleration of the growth rates in these companies; however we don’t believe it is a sign of problems with the fundamentals of these businesses.

“Rather, what we are seeing is an increase in capital expenditure by these hyper scalers, who need to invest billions of dollars into the hardware used to power AI applications and the GPUs used to power AI computations.”

Ms Miller says the capital intensity measured by the capex/sales ratio of the hyper scalers has increased from roughly 11 per cent in 2020 to around 21 per cent in 2025.

“Across the big five hyperscalers, we’re seeing over US$300 billion being invested this year, rising to over US$500 billion by 2030. The increase in capital reflects the next evolution of technology as these big trillion-dollar companies invest in the hardware necessary to power AI applications,” she says.

Investors should be aware that these AI investments will likely take time to monetise, resulting in short-term margin pressure and impacting earnings in the coming quarters.  However, Ms Miller says these investments are necessary to take costs out of the hyper-scalers and improve margins.

“We see this as one of the biggest long-term opportunities for investors.  By 2030, we expect a significant amount of margin expansion as these businesses harvest the benefits of the investments made today.

“We are already seeing more use cases for AI within these businesses. Microsoft has saved up to US$500 million in call centre operating costs through AI applications. These applications are assisting with automating tasks like coding, content generation, office productivity and marketing.”

Other beneficiaries of this wave of capital investment include companies like Taiwan Semiconductor Manufacturing Company (TSMC), which has a monopoly on the manufacture of advanced chips for the likes of Nvidia which end up in the hyper scalers data centres, says Ms Miller.

“These advanced chips are manufactured using high-tech proprietary processes involving array of complex chemistry and physics. As these chips become more advanced, TSMC will be able to extract greater pricing power. TSMC has even taken share from its competitors Samsung and Intel, which have been unable to keep up with these advancements.

“This is a fast-moving technology space, so the winners and losers of the AI play can change within a year. In January this year, DeepSeek emerged from nowhere. It was on no one’s radar and all of a sudden there was a new competitor in town.

“We can’t be complacent about emerging winners. However, TSMC has proven that it has invested in numerous amounts of R&D processes to cement its position in the semiconductor supply chain,” says Ms Miller.

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Annabelle Miller

For the past five years, global equities have been dominated by a small group of companies who have led the market rally. For many investors it has been easy to get caught up in the hype of this Magnificent 7 and miss out on the opportunities available further down the market cap spectrum. High quality, growth companies can exist anywhere. Great businesses are not defined by domicile, size or industry alone. Investors should be looking to invest in high quality growing businesses which have the ability to generate sustainable, above average economic returns that will produce superior investment performance over the long-term.

There are a number of compelling opportunities in the mid-cap space and we are increasingly seeing higher internal rates of return (IRR) in smaller, more overlooked names. The dispersion and variance in business quality increases as you move down the market cap curve, but this opens up the opportunity for alpha-generative active management. There are some very exciting high-quality, high-returning companies with sustainable competitive advantages in the mid-cap space, and our portfolio weightings are increasingly tilting in that direction.

One example is the international money transfer platform, Wise. The market for moving money across borders is slow, inefficient, and expensive. It’s still dominated by large correspondent banks who charge significant fees and spreads, and who are institutionally inhibited from changing. This is a huge market, and these banks are steadily losing share to more modern fintech competitors that have emerged to disrupt the market.

Of these fintechs, Wise has the deepest and most extensive global platform. Built over more than a decade, this platform gives Wise a structural cost advantage – it’s cheaper for them to move money from Country A to Country B than it is for anybody else. What further differentiates the company is that they take this cost leadership and share the benefits with customers, by offering the lowest prices in the market. In some ways, you can think of Wise as the ‘Costco of payments’ – it’s philosophically the same kind of business model, where scale economics are shared.

The company’s price leadership is central to our investment thesis. Payments is a volume business and offering the best price in town positions Wise well to capture a significant chunk of the volume moving away from traditional banks. Those volume gains will allow Wise to further lower prices, which will attract more volume – it’s a self-reinforcing cycle that should further strengthen the company’s competitive advantage.

Another space we find attractive is the semi-conductor equipment space. The semiconductor equipment complex experienced a sharp correction in January following the announcement by the Chinese AI company, Deepseek that it had demonstrated capabilities competitive with, or better than, frontier models from Western counterparts at lower inference costs. Investors were initially concerned this would lead to dramatically lower capital spending on the advanced semiconductor devices in servers powering AI models. However, big technology companies, such as Amazon and Microsoft, have historically seen that a decrease in the cost of technology components is positive for long term adoption across a broader number of applications. We believe this has been an overreaction by investors. We remain confident in the long-term growth opportunity for franchises innovating at the leading edge of semiconductors including TSMC, the suppliers of front-end equipment, ASM International, and back-end testing equipment, Advantest.

ASM International is a beneficiary of investment being made to develop cutting edge logic and memory semiconductors by the likes of TSMC, Intel and Samsung. It is the market leader in atomic layer deposition (ALD) machines and epitaxy tools, essential for fabricating these semiconductor devices. We view ASM’s competitive advantage as a function of its proprietary chemistry for deposition processes and customer loyalty courtesy of the high cost and time investment required to develop chemistry and layer processes. The business is well positioned to benefit from the increasing capital expenditures of foundries on the back of greater complexity in semiconductor architectures as the industry looks to ways of bending Moore’s Law.

Advantest is another great example of a ‘diamond’ in the semi-conductor space as the testing process is critical in the semiconductor manufacturing process. The testing process ensures devices operate as designed and identify defects ahead of time, particularly in end applications with zero-defect tolerance such as automotives and medical devices. The testing process also helps to improve semiconductor yields. Improving yield is the most important factor in overall wafer processing costs as incremental increases in yield significantly reduce manufacturing costs.

We take a bottom-up approach to investing, as we believe that high quality, growing companies can exist anywhere and great businesses are not defined by domicile, size or industry alone. Deep fundamental research is required to identify these truly exceptional companies. We look to own these companies long-term, paying particular attention to their valuations at any given point in time to ensure we are not overpaying.

By Annabelle Miller, principal, investments.

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Annabelle Miller

Artificial intelligence (AI) chatbots, like ChatGPT and Bard, are the beginning of the next wave of computing. But investors should consider opportunities along the supply chain in order to make the most of the opportunities, according to ECP Asset Management’s principal, investments, Annabelle Miller.

“At this early stage of innovation, it can be hard to pick who will thrive and survive, and who will take an early lead but then disappear.  We’ve seen it many times in the past, when first movers become historical footnotes.  For example, companies such as Blackberry (then known as Research in Motion) dominated the mobile phone market for a period but is now almost unheard of.

“Therefore, investors looking for quality, long-term investments would be better served looking at the companies that supply essential products to these companies, as they will prosper regardless.  This is known as a “pick and shovel” approach – investing in companies that produce the tools required by others.

“For example, to commercialise products such as ChatGPT and Bard, more powerful semiconductors will be required to run the computational workloads.

“Companies supporting semiconductor businesses are a toll-road on the capital investment undertaken by TSMC, Samsung and Intel as they expand semiconductor manufacturing capacity to meet market demand over the next decade,” Ms Miller says.

Many semiconductor companies had a volatile 2023, as the industry went through a large inventory correction due to the “bullwhip effect”, following COVID supply chain disruptions.

“We would argue that while semiconductors may be overhyped, they are overhyped for a very good reason. It is an industry that is growing but also an industry that is highly cyclical and these dips provide buying opportunities,” Miller says.

“One company positioned well in this landscape is Japanese manufacturer of semiconductor industry testing equipment Advantest which provides testing to major semiconductor players Nvidia and AMD.

The semiconductor testing industry is highly concentrated and effectively a duopoly (Teradyne is the other major player). Industries like this are particularly attractive because of their pricing power – due to barriers to entry – which enables superior returns on capital and equity.

“Another interesting story is that of ASM International which now produces atomic layer deposit (ALD) machines. These machines are mission critical in the fabrication of chips and allow a very thin uniform layer of chemicals to be deposited on a semiconductor chip which changes the electrical conductivity and boosts the power characteristics of a chip,” Miller says.

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In addition, ECP has appointed Lauren Rigby as a junior analyst, effective 10 October 2022.

Miller joins ECP from PM Capital where she spent 8 years as an investment analyst covering global equity companies. Prior to this, she was a research analyst at Perpetual Limited. She holds a bachelor of commerce in economics and finance from the University of Sydney.

In her role, Miller will be responsible for identifying and researching companies suitable for responsible long-term sustainable investment and considering their inclusion in a concentrated portfolio of high quality companies alongside the ECP investment team.

Chairman and chief investment officer at ECP Asset Management, Dr. Manny Pohl, said that Miller’s skill set will enhance the investment thinking and decision-making in their investment team.

“Annabelle brings with her a wealth of knowledge of global companies and international markets, spanning more than 10 years.

“Her experience with in-depth analysis of global companies across a range of sectors will be very valuable to us.

“Having Annabelle and Lauren on board is part of our ongoing strategy of building out a solid diverse investment team at ECP,” say Dr. Pohl.

Mentored by the ECP Partners, Rigby will be joining the ECP Analyst Pathway Program which focuses on providing foundational knowledge across investment markets, business strategy, forensic accounting, corporate finance, economics, and the investment process.

Prior to joining ECP, Rigby was an investment associate at MA Financial Group, and a broker liaison officer and associate mortgage expert at Lendi.

Rigby completed a bachelor of business in accounting and finance from the University of Technology Sydney.

Miller and Rigby both join ECP at a time of accelerated growth for the firm, said Dr. Pohl.

“Both Annabelle and Lauren will play an important role in building out the resources of the firm. They have diverse backgrounds and will contribute meaningfully to our investment capabilities,” says Dr. Pohl.

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