Main asset classes Supertrends
What do rising pet ownership, global climate school strikes, and the launch of next-generation 5G mobile networks have in common? They all are testimony to the sweeping societal changes that we picked up on when we first launched our five Supertrends in 2017.
Our Supertrends cover a broad variety of timely topics: our increasingly multipolar world; infrastructure; population aging; the influence of the next generation; and fast-paced technological innovation. They are focused on structural driving forces and aim to improve a portfolio’s overall risk/return profile, outperforming the broader market in the long run. Our conviction in these trends remains strong.
A new addition: Education technology
In June 2019, we introduced new angles to our Supertrends framework. In relation to the Silver Economy Supertrend, for example, there is a growing number of seniors living with pets. Animals have their own dietary and veterinary needs, which should fuel growth in the pet care market to over USD 200 billion globally by 2025. In terms of our Millennials’ Values Supertrend, being online and using social media comes naturally to Generation Z. They drive demand for education technology, which is in the early stages of what we believe will be a major transformation.
Marketers Media expects the digital education market in North America to grow to more than USD 400 billion by 2023. In our Technology Supertrend, we broaden our “digitalization” subtheme to focus on 5G and how it impacts big data. In addition, environmental, social and governance (ESG) criteria remain a key topic and investment focus particularly for the Millennials, whose voices as responsible consumers are increasingly being heard.
Long-term themes across sectors
Thanks to the Supertrends’ modular concept, investors can invest in single stocks, more niche themes, or the broader Supertrends themes. Together the five Supertrends provide broad diversification in terms of Credit Suisse’s single stock selection, with every sector in the MSCI World part of a portfolio.
The largest exposures in a Supertrends portfolio context are in IT, healthcare and industrials. In terms of regions, the USA makes up almost 50% of our Supertrends stock selection – less than its weight in the MSCI World. Conversely, we have a higher exposure to emerging markets, which reflects long-term growth opportunities in many of these countries, as well as worldwide societal and demographic trends.
Global economyWe expect only sluggish global growth in 2020 of 2.5%, almost unchanged from 2019, but a recession continues to look unlikely given supportive macro policies. De-escalation on the trade war front will be key.
Alternative investmentsAlternative investments have become increasingly established as a building block of portfolios, particularly in today’s world of low-for-longer interest rates and yields.
Investment strategy 2020Now that interest rates around the world have reached record lows or slipped into negative territory, even risk-averse investors will need to buy higher-risk assets to generate positive returns.