TEAM Global Megatrends
Mega Trends are the secular, structural, forces that influence the present, and, more importantly, will shape tomorrow’s global economic landscape. Identifying these trends, and then positioning our investment portfolios to capitalise on the investment opportunities they create, forms the core of TEAM’s investment process.
For a long-term trend to develop requires a significant and sustained shift in the identity, activities and behavioural values present in popular culture. Consequently, megatrends can be truly global in magnitude, and yet develop so subtly, that oftentimes they are hidden in plain sight, whilst exerting a growing influence over our daily lives that goes largely unnoticed.
In TEAM’s view, successful investing requires an ability to recognise, and capture, these opportunities before others. Of equal importance, in determining long-term outcomes, is the early identification of areas within markets or economies entering structural decline. Mega trends are forces that are symmetric in nature, equally as destructive as they are creative. In addition to guiding us towards potentially attractive areas of investment, they also help us to understand pockets of the market that we should avoid.
In a world where most investment managers accept the consequences of having to hold the good and the bad because of a slavish devotion to backward-looking benchmark investing, we like to think we see things a little differently.
Shifting Economic Power
Economic growth rates have largely stagnated in developed markets since the last financial crisis, whilst debt levels and the costs of future social care commitments have rapidly escalated. Emerging market growth, however, has continued to accelerate, largely free of these shackles. The West’s economic hegemony of the last 100 years, and the role of the United States dollar as the global reserve currency, is under genuine threat from China’s emergence as an economic and financial superpower, and the rapid transition to domestic consumption, rather than export based, growth, spurred by the youthful middle class across Asian nations.
Select Focus – Asian Technology Sector, Urban Transportation, Water and Waste Treatment, Premium Western Consumer Brands.
Increasing urbanisation in Western nations, and continued growth in emerging market populations, are stressing the capacity of the world’s natural resources. Political and social movements away from polluting technologies are driving developments which will result in greater optimisation of our planets ability to support future global populations.
Select Focus – Renewable Energy, Cleaner Transportation, Water and Waste Treatment, Data Analysis and Process Optimisation.
There is a great disparity in the demographic problems (and opportunities) facing developed and developing nations. Changes in lifestyles and advancements in medical care are resulting in a surge in the number of retirees, and life expectancy in the West. This leads to a greater financial reliance upon a relatively smaller workforce. Developing markets, by comparison, have much younger demographic profiles, driving consumption and saving, rather than consolidation and a focus on domestic social commitments.
Select Focus – Medical Equipment, Pharmaceuticals, Urban Accommodation, Savings Products, Luxury Brands.
There are few areas of our lives untouched by technology. We live in a data driven world, where the things to which we attribute value have shifted in less than a generation. The global nature of online business at both the consumer and corporate level is spelling the death knell for multiple legacy industries, but also providing a new myriad of opportunities in both the physical and virtual worlds.
Select Focus – Telecommunications, Data Analysis, Cloud Computing, AI, Machine Learning, Genomics, Robotics, Block Chain, Nanotechnology, Medical Equipment and Diagnosis, Leisure and Gaming.
Environmental, Social and Governance
ESG awareness, backed by increased legislative effort, is driving the biggest change in how we invest since the technological boom of the 1980’s. The potential social and environmental impact of a company’s business(es), and the manner in which the corporation conducts itself internally, are now mainstream considerations which any investor has to evaluate when deciding to commit clients’ funds. Indeed, the level and detail of oversight is increasing exponentially. That ‘good companies make good investments’ has never rung so true.
Select Focus – ESG Data Analysis and Providers, Renewable Energy, Urban Transportation, Responsible Finance, Green Bonds.
Urbanisation refers not just to the shift in populations from rural to urban areas, which is occurring in both developing and developed nations, but to the concentration of Business, Education, Entertainment and Research within major urban conurbations. China presently has 14 cities with populations of over 5 million people, compared to 8 cities in the USA. Indeed the 8 largest cities in the world (all with populations over 25 Million) are all to be found in Asia.
Select Focus – Urban Transportation, Water and Pollution Control and Treatment, Accommodation, Consumer Brands.