Supertrends post-COVID era
Supertrends in the post-COVID era
Thematic funds are a rapidly expanding niche that has evolved in recent decades from targeted sector and sub sector investments. The growing interest in thematic investments perhaps lies in the very nature of the disruptive times in which we live today: rapid technological advances, demographics and the climate change challenge are shaking up old business models and creating new ones. Traditional diversification along geographies or sectors may not fully capture this transformation. By diversifying through themes, investors can better capture the long-term trends that are ushering in change.
Our long-term investment themes, the Supertrends, cover six key societal developments that we are convinced will lead to business and investment opportunities. Four years after their initial launch, we have paired some of our Supertrends subthemes with the United Nations’ 17 Sustainable Development Goals (SDGs). We believe that the global coronavirus pandemic has heightened the importance of the SDGs in that they can serve as a guiding principle for future economic activity and development, as well as government cooperation and international relations.
A recent acceleration in global efforts to fight climate change through sustainability-related infrastructure investments serves as a good example of how investment opportunities can be paired with the SDGs. It is important to note that this mapping should be viewed as a compass rather than a formal guideline, as there is no universally accepted definition of what constitutes an SDG-aligned investment.
Higher growth through lower emissions
Political leaders around the world are intensifying their sustainability focus and taking measures to achieve ambitious greenhouse gas (GHG) emission targets, with “net zero” being the new magic number. Our Climate change and Infrastructure Supertrends are well positioned to benefit from this political momentum and planned investments over the decades to come, in our view. The Climate change Supertrend focuses on the decarbonization of economic activity, a development that impacts life on land and below water and contributes to healthy communities. Beyond electricity generation, transport and energy transition, we believe that the food revolution will not only make us healthier but will substantially reduce CO2 emissions worldwide. Meanwhile, the Infrastructure Supertrend’s core themes are energy and water (infrastructure), but also include the infrastructure required to facilitate the movement of people and goods through safe and efficient transportation. The subthemes in both of these trends are reflected in some of the UN SDGs, such as industry, innovation and infrastructure, decent work and economic growth and responsible consumption and production.
Finding a (better) social balance
The Anxious societies Supertrend addresses better equality of opportunities, with a focus on the affordability of essential human needs such as housing, education, healthcare and personal security, and the issue of decent employment amid changing labor markets. During the COVID-19 pandemic, popular frustration continued to center on domestic “pain points.” Job security due to economic challenges and changes, the rising cost of education, increasing healthcare expenses, as well as personal and public safety are among the top concerns – and priorities – for many individuals around the globe. We see interesting investment opportunities in companies that address these challenges and provide solutions to lowering the costs of basic services, in other words employers that have a solid score on the “social” aspect of environmental, social and governance (ESG) are also in focus. These topics touch on several UN SDGs, including decent work and economic growth, reduced inequalities and sustainable cities and communities.
Living healthier and longer
We expect both the elderly and the younger generations covered in our Silver economy and Millennials Supertrends, respectively, to continue to drive change ahead. The aging global population inevitably increases the need for medical solutions for health conditions associated with old age and the related healthcare costs and coverage, especially as this trend increasingly impacts emerging markets. In terms of the younger demographic, Millennials are pioneering a healthier kind of consumption. After shaking up shopping and advertising habits, we believe they will next disrupt the finance sector, a focus this year in our Digital natives subtheme. Sustainability and responsible consumption should continue to thrive thanks to the younger generation’s influence. These subthemes can be linked to several of the UN SDGs including good health and wellbeing, gender equality and decent work and economic growth.
Can’t touch this
Technology is at the heart of many advances toward the UN SDGs. Indeed, the subthemes in our Technology Supertrend are reflected in many of the SDGs, ranging from peace, justice and strong institutions to sustainable cities and communities. We believe that the next frontier will be the “touchless economy,” as the removal of physical interaction in human communication, life and work has accelerated dramatically during the COVID-19 pandemic. We expect that touchless user interfaces and interconnected multi-devices and applications will increasingly enable interaction via voice assistants, while biometric authentication functionality based on voice or image recognition could provide personalized services for users at work or at home.
