Supertrends present attractive investment opportunities

Invest with foresight. With Credit Suisse Supertrends.

The legacy of Alfred Escher, founder of the Schweizerische Kreditanstalt, continues to shape Credit Suisse to this day. The foresight he demonstrated regarding the pressing issues of the future inspired us to launch the Supertrends. The Supertrends are based on several years of social trends and present attractive investment opportunities.

Escher brings Switzerland up to date 

A little more than 200 years ago, Alfred Escher, the founding father of what is now Credit Suisse, was concerned with the big questions of the future of his time. His projects catapulted Switzerland into the modern age and made the country fit for the future. The impact of his pioneering work in the fields of transport, education, and finance is still felt to this day.

It is thanks to Escher's persistent and tireless ambition that Switzerland today has one of the best railroad networks in Europe.  To meet the demand for specialists in the planning, construction, and maintenance of railroad infrastructure, Escher also played a part in founding the polytechnic. This national training center gave rise to what is now the Swiss Federal Institute of Technology (ETH) in Zurich. In 1856, Escher also founded a bank so as not to be reliant on foreign countries to finance the construction of the railroads. At the time, the Schweizerische Kreditanstalt (now Credit Suisse) financed important infrastructure projects and played a key role in Escher's magnum opus, the Gotthard Tunnel.

Milestone: Construction of the Gotthard Tunnel

Alfred Escher's magnum opus: The construction of the Gotthard Tunnel

Illustration: Old engraving of the Gotthard tunnel, The London Illustrated News, 1882
Source: Getty Image

Escher's legacy: the six Supertrends

The synergies Escher created among politics, the railway, finance, and education added up to growth and prosperity and helped investors to make profits. Escher's legacy inspires us to keep an eye on the latest trends and thereby find the best investment solutions. In this spirit, the research experts at Credit Suisse launched six Supertrends.

The core of these trends is formed by demographic, socioeconomic, and political developments as well as technological and scientific progress.

Supertrend #1: Infrastructure

Infrastructure spending plays a key role in the economic packages that governments around the world have introduced in order to boost their economies after the recession in the wake of COVID-19. Transportation, water, and energy infrastructure as well as affordable housing are particularly interesting for long-term investments.

Supertrend #2: Technology

The COVID-19 pandemic has accelerated the digital transformation: trends – such as working from home, telemedicine, online shopping, cashless payments, schooling from home, and home entertainment – resulted in record growth in 2020. Digital products and services are likely to remain a high priority. At the same time, 5G and the expected resulting investments will support this Supertrend.

Supertrend #3: Anxious societies

Society's main concerns, including inequality due to lack of opportunity, limited access to essential goods and services, the changing labor market, retirement savings, affordable housing, as well as health and education, gained importance due to the COVID-19 pandemic while government budget deficits skyrocketed to all-time highs. The private sector can offer effective solutions here that do not have to result in higher government spending.

Suptertrend #4: Silver economy

The percentage of senior citizens in the global population will double by 2050, thereby putting the number of senior citizens by then at more than two billion. On the one hand this means new investment opportunities, but also economic challenges that require innovative solutions in healthcare, insurance, as well as the consumer and real estate markets. The COVID-19 crisis has also highlighted the importance of increasing the number of hospitals and seniors' facilities over the coming years.

Supertrend #5: Millennials' values

On the other side of the demographic tree, millennials are focusing on technology and sustainability. Millennials are one of the largest generations in history and will soon be reaching investment age. Sustainability, clean energy, and impact investments matter to millennials and are gaining importance across the investment opportunity grid.

Supertrend #6: Climate change – decarbonizing the economy

"Climate change" was launched as a new, sixth Supertrend in 2020. Under the Paris Convention of 2015, numerous countries promised to introduce measures in order to reduce emissions and become climate neutral (emissions produced balanced out by reductions) between 2050 and 2100. The "climate change" Supertrend focuses on the sectors of power generation and fossil energy sources, transportation, agriculture, and food.

Outperform with Supertrends approach

The theme-based investment approach of the Supertrends tends to be less affected by daily fluctuations in the financial markets. Rather, the intention is to capitalize on the predictability and sustainability of long-term trends. Each of the Supertrends identifies equities of companies that are expected to deliver an above-average performance as a result of these trends.

With about 25 to 40 individual equities per Supertrend, the Supertrends approach offers a good level of diversification. Using well-founded bottom-up analyses of individual equities, the aim is to achieve a high excess return versus the benchmarks over the long term.

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