Capital cycle RV opportunities and Japanese insurer deep-dive - VP Thematic | Research

Investing alongside the capital cycle is a source of outperformance for equity funds over 2-3y+ time horizons.
VP has quantified the capital cycle to track in real-time for 300+ regional industries. The historical alpha has been in the range of 3-4% per annum.
Most capital-abundant industries: US packaging stocks are highly sensitive to the bullwhip effect reversal. Entertainment stocks are still vulnerable.
Most-capital scarce industries: energy and shipping remain very capital-scarce: buy dips in energy services, and tankers have more room to run.
A new structural opportunity has been flagged: Asia insurance. We like Japan lifers as an asymmetric play for a higher rate regime and BoJ pivot.