Three high-quality global companies for growth
James Harries, a senior fund manager at STS Global Income & Growth Trust highlights three favourites.


The STS Global Income & Growth Trust follows a distinctive quality-focused, conservative investment style. We try to consider the downside to investments as much as the potential opportunity and to produce good risk-adjusted returns balanced between income and capital growth. We believe this approach is especially relevant today given that we consider the economic outlook to be murky at best, driven by the very material and rapid rise in interest rates around the world, and still elevated equity valuations, notably in the US.
In this context, we want to invest in companies that are predictable, boast well-entrenched competitive advantages, and have limited requirements for capital when growing their businesses. Such companies tend also to exhibit attractive margins, allowing them to weather more challenging economic environments, especially when combined with a generally higher level of inflation, as we see today.
1. CME (Nasdaq: CME)
A good example is CME, previously called the Chicago Mercantile Exchange (Nasdaq: CME). This company is extremely well placed to benefit from the structurally greater need to hedge inflation and interest-rate risk, as well as from other areas such as commodity prices. The post-quantitative easing world, together with the return of inflation, is likely to be characterised by greater volatility and uncertainty, to the benefit of this company. This leads to attractive margins and returns as well as generous shareholders’ returns. CME is a core long-term investment in the fund.
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2. Reckitt Benckiser (LSE: RKT)
The second company we highlight today is Reckitt Benckiser (LSE: RKT). It is a business that will be familiar to many owing to its well-known brands, such as Dettol and Nurofen. This consumer health and household products company has had a lacklustre few years owing to many problems that we now think are being fixed. Following a three-year turnaround, Reckitt is now well on its way to generating stable and reliable growth.
Despite the market’s scepticism, reflected in the company’s lowest valuation in a decade, Reckitt has achieved high-single-digit like-for-like sales growth since 2019, alongside enhanced capital efficiency and reduced financial leverage. Reinforcing confidence in its future, Reckitt raised its dividend by 5% last year, ending a prolonged period of stagnation, and announced a significant share-buyback programme, signalling strong growth prospects ahead.
One in six workers in the US is co-employed by outsourcing specialist ADP
3. ADP (Nasdaq: ADP)
Finally, we are excited about ADP (Nasdaq: ADP). This is a very high-quality company engaged in the provision of payroll and human capital management services to large and small companies, predominantly in the US. ADP’s employer services division offers payroll, human capital management solutions, human resources outsourcing, insurance and retirement services.
The smaller but faster-growing professional employer organisation segment provides HR outsourcing to small and medium-sized businesses through a co-employment model; one in six workers in the US is co-employed by ADP. Despite this scale, ADP still has ample scope for growth as many businesses do not yet outsource these functions. As the competition for talent intensifies and the provision of HR becomes more complex, the impetus to outsource builds. This resilience and quality were demonstrated by recent results and the company’s decision to raise its dividend by 20%.
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James Harries is the Senior Fund Manager responsible for the Trojan Global Income Strategy. He has over 20 years of investment experience and has managed global equity portfolios since 2002. James is the manager of the Trojan Global Income Fund, co-manager of the Trojan Ethical Global Income Fund and was awarded management of STS Global Income & Growth Trust in November 2020.
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