In the US, one exciting opportunity is in sustainable packaging, where volumes are moving meaningfully toward aluminium, which is infinitely recyclable and should have a lower overall life cycle impact compared to plastic.
Ball Corp is a leader in packaging carbonated beverages and is also pursuing the growing market for aluminum cups and packaging of still water in aluminum.
The healthcare sector has rallied on softened political rhetoric. We believe the service innovations-managed care companies such as UnitedHealth Group have put in place, such as providing support for underserved populations to address chronic disease issues, are part of the solution to managing healthcare costs.
Biotechnology company BioMarin Pharmaceuticals, which focuses on improving the lives of those with rare diseases, was driven higher by product developments for two pipeline treatments addressing dwarfism and hemophilia.
In the IT sector, Apple rose on optimism for its iPhone 11 sales ahead of the 5G cycle and on the success of its AirPods, and Microsoft continues to benefit from the shift to cloud services. Both companies have global facilities that are 100% powered by renewable energy.
Lam Research rose on an improved demand outlook for NAND flash memory related to 5G technology. Lam Research's technologies are essential to the miniaturisation of semiconductor technology, which reduces device size and energy consumption for chips and water intensity during the production process.
Looking ahead, we see progress on international trade as a potential catalyst for a manufacturing recovery.
We also anticipate that continued accommodative monetary policy and a strong, confident consumer will be supportive of economic growth and in turn equity prices.
At the same time, we are mindful of risks in an election year as concerns grow regarding potential policy changes, as well as valuations that are above average.
Derek Deutsch is portfolio manager of the Legg Mason ClearBridge US Equity Sustainability Leaders fund
• Opportunities in sustainable packaging for carbonated beverages, where volumes are moving meaningfully toward aluminum
• Reduced regulatory pressure improves the outlook for healthcare stocks that can be part of the solution to managing healthcare costs and improving outcomes
• Risks in an election year as concerns grow about potential policy changes
• Yield-oriented utilities, real estate and consumer staples sectors are somewhat exposed