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Megatrends – the forces shaping our future

5 days ago

Sheldon MacDonald, CFA Deputy Chief Investment Officer at Architas

In this article we find out what megatrends are and what they mean for investors, before examining five megatrends identified in a recent piece of research by BlackRock.

What is a megatrend?
Megatrends are powerful changes that are expected to cause big structural shifts in the global economy over the next few decades. They will create new opportunities and challenges, affecting everything from our governments’ priorities to the way we do business and how we spend money.

What do megatrends have to do with investing?
In simple terms, long-term investing is all about identifying companies or assets that will be worth more money in the future than they are today. One way to identify such assets is to look at the themes or trends that are changing society and picking the companies, sectors or countries that stand to benefit from these.

The five megatrends
BlackRock recently identified the five megatrends that they believe are most likely to shape society in the near future.

Rapid urbanisation
Hundreds of new cities have sprung up in the last few decades, and hundreds more are expected over the next few. Every new city requires infrastructure such as transport, communication networks and housing. With dense populations, new cities can also serve as launchpads for young, rapidly growing businesses.

Climate change and resource scarcity
Our growing population means a greater need for energy, food and raw materials while our natural resources are dwindling. We must therefore improve efficiency, reduce waste and seek alternative resources. Hand-in-hand with this is the issue of climate change. It has become a big part of the public agenda – we just need to look at the backlash over single-use plastic and meteoric rise of teenager Greta Thunberg.

Demographic and social change
Many countries have ageing populations, and this is expected to become more prevalent in the future. This shift will affect how our workforce earns a living and will increase the focus on healthcare for both individuals and governments. At the other end of the spectrum, the younger generations are growing up with vastly different priorities to their parents – from what they eat and how they travel to where they invest their savings.

Emerging global wealth
There is a growing middle class in many emerging economies, such as China and India. These countries are offering big opportunities for global and local suppliers of consumer goods, healthcare, telecommunications and many other services.

Technological breakthrough
Technology is integral to each of these megatrends, but it’s a trend in itself too. The likes of 5G connectivity and artificial intelligence have the power to innovate and disrupt industries and societies across the globe, creating opportunities but also new challenges.

Can you invest in megatrends with Architas?
Our funds of funds spread your money across many different fund managers, each with their own unique investment philosophies and processes.

Some of them consider megatrends like these when making investment decisions. They identify those companies, industries or countries that should benefit from these trends over the long term. Other fund managers take contrarian approaches, such as looking for companies that are undervalued. And some fund managers take a completely different approach altogether. Our investment team creates portfolios containing the mix of these funds that they believe are most likely to help you achieve your financial goals.

 


The value of investments and any income from them can go down as well as up and is not guaranteed, and you could get back less than you originally invested.

AXA is a worldwide leader in financial protection and wealth management. In the UK, one of the AXA companies is Architas Multi Manager Limited (AMML), an investment company that provides access to other investment managers’ services through a range of multi-manager solutions, including regulated collective investment schemes. AMML in the UK works with strategic partners and AXA Group internal fund managers, to find out more information about this please visit architas.com/inhousestratpartners/

Architas Multi Manager Limited is a company limited by shares and authorised and regulated by the Financial Conduct Authority (Firm Reference Number 477328). The company is registered in England: No. 06458717. Registered Office: 5 Old Broad Street, London, EC2N 1AD.

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