Supertrends. One Year On.
We have updated our Supertrends, the five long-term investment themes we established a year ago. Each Supertrend remains highly relevant and forms an integral part of the Credit Suisse House View.
A year ago, we launched a new approach to thematic investing to capture the major societal shifts underway. The result were our five high-conviction Supertrends: "Angry societies – Multipolar world", "Infrastructure – Closing the gap", "Technology at the service of humans", "Silver economy" and "Millennials' values".
The latter two reflect the two most meaningful simultaneous demographic trends: population aging and the gradual generational shift to the Millennials. What we like about these themes is that, whatever else happens in the world, they continue to unfold because they are demographic. They can therefore be regarded as defensive from an investment point of view. As for technology, we are merely at the beginning of a new era, which represents our growth conviction.
New features and adjustments one year on
While all five Supertrends remain fully valid, we are introducing a number of new features and adjustments. In "Technology at the service of humans", we introduce blockchain as part of the digitalization sub-theme. In our view, there are a number of beneficial ways to use the blockchain technology. We regard it as an accelerator for digitalization and an opportunity for investors to further diversify into new areas that will benefit from technological developments in future.
In "Infrastructure – Closing the gap", we add telecom infrastructure as a fourth sub-theme, as 5G technology is likely to be a catalyst for large investments in the sector. In terms of regional focus, we see additional potential for infrastructure investments in Africa and Latin America. Accordingly, we add the respective investment opportunities to our picks.
Last but not least, environmental, social and governance (ESG) criteria are set to remain a key topic and investment focus for Millennials. We therefore introduce a full ESG overlay to the "Millennials' values" Supertrend, ensuring that all stocks selected score high in this regard.
Robust performance amid higher volatility
Now that elevated volatility has returned to global equity markets, we remain convinced that active investments and strategies aimed at creating value through specific selection (alpha strategies) are the right proposition for investors. With around 25 to 40 single stocks per Supertrend, our approach offers a good degree of diversification. Furthermore, each Supertrend's clear thematic focus ensures a meaningful difference from broader equity market indices. We have also made sure that each Supertrend includes a sensible combination of cyclical and defensive companies.
The more volatile financial markets of the last few months proved that this careful approach pays off – our indices have remained robust. As our Supertrends enter their second year since inception, our aim is unchanged: generating a positive absolute return for investors in the long term.