Mastercard

Mastercard is a world-class business, with a strong growth trajectory, bought at an attractive entry valuation due to a temporary market dislocation.

Pillar
Quoted equities
Theme
Quality franchises
Geography
Global, USA
Invested date
2021
Security
Common Equity

RIT initiated a position in Mastercard in 2021 after a period of weak performance in the stock price that was driven by fears of potential disruption to Mastercard’s core business by fintech start-ups. However, after leveraging specialist insights from our core venture capital managers (which fund many of the world’s leading fintech start-ups), we gained confidence that the expanding access enabled by fintech was in fact a tailwind for Mastercard’s business, rather than a headwind.

JRCM believes that the increasing digitisation of money and payments, combined with customer-centric innovation, can lead to double-digit revenue growth for Mastercard over the medium term.

Mastercard can leverage its market-leading position to increase revenues with little cost and continue to expand its margins. With prudent capital allocation through share buybacks and dividends, RIT anticipates a mid-teen total shareholder return through its anticipated holding period.

Even in an unfavourable scenario such as a recession, Mastercard’s business should be resilient, due to strong secular trends and the management’s ability to keep control of costs in order to protect operating profits.

>7%
Annualised outperformance vs MSCI ACWI index since initial investment1

1As at 30 June 2024. Total shareholder return of Mastercard compared to the MSCI ACWI index since initial investment in November 2021, USD basis
Source: Company information, Mastercard corporate information, Bloomberg