Supertrends Shape the Future of Investing
Five long-term themes expected to provide attractive investment opportunities in the years ahead.
When Alfred Escher, the founding father of Credit Suisse, started his business, he spotted upcoming big trends – railways and industrialization – and did his best to enable investors to reap returns. Though a lot has changed since Escher's time, infrastructure such as railroads still classifies as a popular investment opportunity.
Meanwhile, new alternatives are opening up as a result of societal change and gaining popularity. Escher's legacy inspires to keep up with the latest trends to find the best investment solutions. A thematic investment approach, for instance, depends less on the daily ups and downs of the financial markets, but rather seeks to profit from the predictability and sustainability of multi-year trends.
Investors are turning to thematic investments to benefit from long-term societal trends such as demographics, socioeconomic trends and scientific progress. Bearing this in mind, Credit Suisse experts have identified five major themes expected to provide attractive investment opportunities in the years ahead.
- Millennials' Values
Millennials are one of the largest generations in history and soon reaching investing maturity. This influential group is redefining investment themes: sustainability, clean energy, and impact investing matter to Millennials and are gaining importance across the investment opportunity grid.
- Silver Economy – Investing for Population Aging
By 2050 the number of senior citizens is expected to grow to more than 2 billion people. The growing number of elderly will pose economic challenges, but also open up new investment opportunities. Investors positioned along the continuum of senior citizens' wants and needs – such as senior-centric consumer goods, healthcare services, senior housing, as well as wealth management and pension solutions – are likely to witness attractive returns.
- Angry Societies – Multipolar World
The growing disenchantment of the Western middle class since the financial crisis of 2008 is having political repercussions. Newly elected governments have a strong popular mandate and are most likely to push for economic policy measures aimed at appeasing the Western middle class. In this context, we expect companies with a domestic focus, so-called national champions and brands, to offer attractive multi-year investment themes.
- Technology at the Service of Humans
Though technology is often seen as a threat that makes manpower redundant, it also offers significant advantages for humans. There is little doubt that digitalization is here to stay. The big winners are likely to be so-called digitizers that offer sales growth and rising operating margins, for instance internet platform companies. Cyber security providers, too, should continue to do well in the years ahead. Moreover, digitalization has a huge impact on non-IT sectors, as the need to innovate is driving trends such as big data and the Internet of Things, to name but two.
- Infrastructure – Closing the Gap
The need for infrastructure spending has been clear since Escher's times. Infrastructure as an unconventional monetary policy generates an interesting investment opportunity. Transportation, water and energy infrastructure as well as affordable housing are particularly interesting for long-term investments. There are many ways to gain exposure to these areas, depending on investors' risk appetite and tolerance of illiquidity.
Depending more on predictability and sustainability, investment themes seem an interesting alternative for those who do not fancy the fast-paced ups and downs of the financial markets. The Credit Suisse Supertrends provide tangible ideas in this regard.