"Supertrends give clients a thematic focus"
Credit Suisse has captured the spirit of the times with its supertrends. In our interview, Nannette Hechler-Fayd'herbe – Head of Global Investment Strategy & Research – explains how the supertrends were defined, what investment opportunities exist, and how the bank plans to move forward with the supertrends.
Credit Suisse launched its supertrends about a year ago. The Research specialists defined five particularly promising themes meant to enable investors to take advantage of long-term social trends. The core of these trends is formed by demographic, socio-economic, and political developments as well as technological and scientific progress. Here are the five supertrends:
- Angry Societies – Multipolar World
- Infrastructure – Closing the Gap
- Technology at the Service of Humans
- Silver Economy – Investing for Population Aging
- Millennials' Values
How did the supertrends come about?
Nannette Hechler-Fayd'herbe*: Our aim was to develop ideas for equities that would withstand the ups and downs of the stock exchange by relying on strong and long-term social trends. This was designed to show both investors and the bank that, despite higher stock index valuations, there were still some excellent investment opportunities in equities that would contribute to positive equity performance.
How did you go about this?
First, our Research team had a brainstorming session on our criteria for identifying long-term and major trends. Our sector specialists provided their observations on significant innovations. Current political events and economic policy trends expected to emerge over the next few years with new governments coming into power also played an important part. It quickly became clear that emerging markets play a key role. The keywords here are multipolar world.
What specific criteria did you define for the supertrends?
The trends needed to apply for the next three to five years, but also needed to be relevant immediately and not just after ten to fifteen years, so that investors can also benefit from them right away. This was how we hoped to eliminate the uncertainty of the short term. The intuitive tangibility of the supertrends was another important factor. The focus was on equity investments. After all, equities were trading at all-time highs and it was necessary to develop active investment approaches that would lead to successful results in the future.
What supertrend do you personally consider to be particularly important?
I get asked this question time and again. But there is no real answer to it. Of course, technology is very relevant. There are quite a few breakthroughs happening right now. But demographics are also important and will remain a fixture for the longer term. Millennials are also key. We need to better understand the young generation, which will have a strong impact on future trends. Each of the five supertrends is important.
How is Credit Suisse's investment strategy informed by the supertrends?
We make a selection of equities, meaning that our recommendations are investment ideas that are implemented using individual equities. We have selected 20 to 40 equities for each supertrend. In the case of mandates, managers use these recommendations as one basis for their selection of equities.
We've had very good feedback from clients on the supertrends. The themes are convincing, as is the performance.
Head of Global Investment Strategy & Research
What options do private individuals have to invest in these supertrends?
Investors can purchase specific equities or add the combined equity recommendations to their portfolios as certificates on the corresponding index. These are actively managed, unlike traditional market indices. A third option is via funds offered by our Asset Management for certain supertrend subthemes, such as the Digital Health Fund, Safety-Security Fund, and the Robotics Fund.
What would you suggest: Investing in a supertrend certificate or in a subtrend fund?
That depends on your individual needs and preferences. It is important to note that both investment solutions are managed actively. There may be more volatility among subtrends that are more narrowly defined. Certificates are more diversified. For instance, the Silver Economy supertrend incorporates both healthcare and insurers as well as consumption.
Is there also a product that covers all the supertrends?
No, clients are looking to focus on one theme and to invest in the equities under the particular supertrend that they personally consider to be promising.
How are the recommendations reviewed, updated, and supplemented?
We review the performance of our recommended equities each month. In doing so, we carry out an analysis of the developments in the themes themselves as well as an analysis of the companies whose equities we have identified. It is sort of like a health check. We have seen that the recommendations are quite stable. However, the market also rises and falls very quickly and securities can reach the goals specified by analysts rather fast, or something about a company can change that makes us want to trade the equity out.
The supertrends were launched about a year ago. What lessons have been learned from this so far?
We've had very good feedback from clients. The themes are convincing, as is the performance.
How do you plan to move forward with the supertrends?
We carry out a more thorough theme review twice a year to determine which subthemes are still relevant. Things change quickly, particularly in the area of technology. We may also take this opportunity to eliminate subthemes or to add new ones given corresponding developments. There is also a new publication once a year that shows where we stand and what new developments there are in terms of subtrends. The next publication was available on June 13, 2018.