What is "friend-shoring" and why is it important for investors?

Friend-shoring (also called ally-shoring or near-shoring) is the strategic relocation of supply chains to politically friendly and stable countries, rather than solely pursuing the lowest production costs. It's becoming important as companies and governments prioritize supply chain security over pure efficiency. For investors, this represents a multi-year trend driving massive capital investment into manufacturing, logistics, and infrastructure in allied nations, potentially boosting revenues for companies that facilitate this transition.

How do geopolitical tensions affect the stocks in this fund?

Increased geopolitical tensions typically accelerate the friend-shoring trend, as companies become more concerned about supply chain disruptions. This could benefit the stocks in this fund, as they provide the essential services, equipment, and infrastructure needed to build new supply networks in allied countries. However, global economic slowdowns can still impact overall industrial activity, which might temporarily affect these companies despite the long-term trend remaining intact.

What industries are represented in the Friend-Shoring Fund?

The fund includes stocks from several key industries that enable supply chain relocation: industrial automation and robotics (companies that make factories more efficient), transportation and logistics (firms that move goods along new trade routes), manufacturing solutions providers (businesses that help set up production facilities), and industrial infrastructure (companies that build the facilities and provide essential services like power management and warehousing).

What is a less-than-truckload (LTL) carrier and why are they included in this fund?

Less-than-truckload (LTL) carriers transport relatively small freight shipments by combining multiple shipments on a single truck. Unlike full truckload shipping, LTL is efficient for smaller quantities of goods. These carriers are essential to the friend-shoring trend because relocated manufacturing often creates more complex and dispersed supply chains with increased needs for smaller, more frequent shipments. Companies like XPO and ODFL in this fund specialize in LTL services that form a critical part of domestic distribution networks.

What catalysts might accelerate growth for these friend-shoring stocks?

Several catalysts could boost these stocks: new government policies promoting domestic manufacturing, escalating international tensions causing companies to accelerate supply chain relocations, trade restrictions that make overseas production less viable, corporate board mandates for increased supply chain resilience, and consumer preference for products made in allied nations. Any of these factors could drive additional investment into the infrastructure and services provided by companies in this fund.

15 handpicked stocks

Friend-Shoring Fund

Capitalize on a major economic shift as companies move supply chains to friendly, stable countries. These carefully selected stocks represent the industrial, tech, and logistics leaders building tomorrow's resilient trade networks, chosen by our expert analysts for growth potential.

Han Tan | Market Analyst

Updated 2 days ago | Published at juin 17