• Best In Class investing targets dominant companies with strong competitive advantages across every major economic sector.
• Market leaders leverage scale and brand trust, creating powerful economic moats that deter new competition.
• Leading firms use AI to widen their competitive gap, enhancing supply chains and accelerating innovation.
• A portfolio of Best In Class shares offers inherent diversification by investing in the strongest market participants.

Why Betting on the Big Dogs Might Still Be the Smartest Play

Every week, it seems, we’re told to chase the next unicorn, the plucky startup set to “disrupt” an entire industry. It’s an exciting narrative, full of garage geniuses and venture capital bravado. But I have to be honest, it’s also exhausting. While everyone is busy hunting for shooting stars, I find myself looking at the constellations, the fixed points in the sky that have guided us for ages. In the market, these are the undisputed leaders, the giants who’ve already won the war and are now just collecting the spoils.

The Unfashionable Allure of Dominance

Let’s talk about what the investment world often gets wrong. They see a household name and think “boring” or “past its prime”. To me, that’s a fundamental misreading of the situation. Take Microsoft. I remember when it was just the company that made Windows. Now, it’s a cloud computing behemoth going toe to toe with Amazon. It didn’t get there by resting on its laurels, it got there by leveraging its colossal resources to pivot and dominate a new field. It’s a lesson in how the big get bigger.

This isn’t a one off tech story. Look at Walmart. People love to talk about Amazon’s retail power, but they often forget that Walmart’s mastery of logistics and its sheer physical scale create cost advantages that are almost impossible for a competitor to replicate. In healthcare, Johnson & Johnson is the perfect example. It’s not just a drug company, it’s a diversified titan across pharmaceuticals, medical devices, and consumer goods. That breadth provides a stability that more specialised firms can only dream of, especially when markets get choppy.

It's All About the Moat, Isn't It?

There’s a simple truth that the venture capital cheerleaders don’t want you to hear. In mature industries, scale creates advantages that are nearly insurmountable. Warren Buffett calls them “economic moats”, which is a fancy way of saying these companies operate from behind fortress walls. A startup trying to compete with Microsoft has to convince millions of businesses to ditch the software they’ve used for decades. Good luck with that. A challenger to Walmart would need to build a supply chain that took half a century to perfect.

These moats aren’t just about money, they are about trust, habit, and regulation. A new company can’t just buy the generations of consumer trust that Johnson & Johnson has built. It can’t just conjure up the regulatory expertise needed to get a new drug to market. These are barriers built of time and experience, and they are incredibly effective at keeping the competition at bay.

A Sensible Spread, For a Change

What I find particularly compelling is the inherent diversification you get by backing these champions. By owning the leader in each major sector, you’re essentially getting exposure to the entire economy through its strongest players. You sidestep the foolish game of trying to guess which theme will be hot next year. Technology fads come and go, but people will always need banking, healthcare, and consumer goods.

This approach gives you a stake in defensive sectors like utilities and staples, which can provide a cushion in a downturn, alongside growth areas like technology. It’s a balanced portfolio by its very nature. It’s a strategy that bundles the top players into one place, a bit like the Best In Class basket, which aims to do just that. Of course, no investment is without risk. These giants face regulatory scrutiny precisely because they are so dominant, and their size can sometimes make them slow to innovate. But history shows they are remarkably resilient. They have the resources to weather economic storms and the power to shape the markets they operate in. To me, that’s a far more reassuring bet than a lottery ticket on the next big thing.

Deep Dive

Market & Opportunity

• The investment thesis focuses on a collection of 17 handpicked market-leading companies, each representing the most dominant player in a major economic sector.
• According to Nemo research, these companies are selected for their strong competitive advantages, often called "economic moats," such as switching costs, cost advantages, and brand trust.
• Investing in this basket offers inherent diversification, providing exposure to the entire economy through its strongest participants, from defensive sectors like utilities to growth areas like technology.
• The strategy aims to capture long-term value by backing established winners rather than trying to predict which specific themes will outperform.

Key Companies

• Microsoft Corporation (MSFT): A technology leader that has transitioned into a cloud computing giant with its Azure platform. Its core products, including the Office 365 suite, create high switching costs for business customers. The company integrates AI, like its Copilot tool, to deepen customer dependency.
• Wal-Mart Stores Inc. (WMT): The world's largest retailer, whose dominance is built on supply chain mastery and a logistics network that creates significant cost advantages. Walmart uses AI for inventory management and demand forecasting to maintain its price leadership.
• Johnson & Johnson (JNJ): A diversified healthcare company with a portfolio spanning pharmaceuticals, medical devices, and consumer products. Its economic moat is built on regulatory barriers, brand trust, and a massive research budget that utilizes machine learning to accelerate drug discovery.

Detailed company data is available on the Nemo landing page.

Primary Risk Factors

• Regulatory Scrutiny: Dominant market positions can attract antitrust actions from governments, which could lead to forced changes in business models.
• Complacency: Large organizations can sometimes struggle to innovate as quickly as smaller, more agile competitors.
• Economic Cycles: Market leaders are not immune to economic downturns, although their resources may help them manage recessions better than smaller firms.

Growth Catalysts

• Artificial Intelligence: Leaders are using AI to widen their competitive advantages, optimize operations, and create deeper customer integration, making it harder for competitors to catch up.
• Compounding Advantages: The core investment thesis, based on Nemo analysis, is that strong competitive advantages compound over time, allowing these companies to remain dominant.
• Index Investing Tailwinds: The continued growth of broad market index funds results in disproportionate capital inflows to the largest companies, creating a positive cycle for their stock prices.