Blue Whale bets on Mastercard and Visa as inflation hedge

investmentweek.co.uk:

Yiu is also confident in tech companies such as Nvidia, ASML and Lam Research, which made it to the fund's top ten holdings.

The two companies are among the top ten holdings for the Blue Whale Growth fund, and lead fund manager Stephen Yiu highlighted their ability to benefit from the shift to a cashless society and from higher inflation as consumers ramp up their spending.

He explained: «With prices up across the board, when consumers go to top up their car with fuel, or buy their weekly groceries, Visa or Mastercard will take their percentage of each inflated debit/credit card payment. In addition, as people look to maintain their current standard of living, they may be forced to put more on their credit card, where these two companies will levy their interest charges.»

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As a result, they are both less affected by inflationary pressures on the external costs of doing business, he added.

But high inflation is not the only economic trend impacting the world at the moment, as it has come hand in hand with high interest rates in a bid to bring said inflation down.

According to Yiu, one stock best positioned to benefit from high interest rates is Charles Schwab, «simply due to higher rates of interest on cash deposits».

Although the bank took a hit following the banking turmoil in the US and Switzerland in March, the manager said he is confident in the company, explaining it is set to benefit from the consolidation in the banking space, as customers of smaller, riskier depositories reallocate their cash into Schwab or larger institutions.

Yiu said: «Over $130bn was brought into the investment platform in Q1 2023, and new customer signups