Megatrends that will shape investment growth
By Kirsten Hastings, 31 Jul 18
There are nine key megatrends that will have a big impact on the investment philosophy of the future, according to research by RBC Wealth Management, part of the Royal Bank of Canada.
Technology as a key driver of investment opportunity
It is estimated that by 2020, 50 billion devices will be connecting, sending and receiving data all round the world.
Additionally, over the course of 2018, global spending on digital transformation technologies is expected to reach $1.3trn (£1trn, €1.1trn), an increase of 16.8% compared with 2017.
With technological advancements in industries such as healthcare, food services, retail and logistics viewed as the catalyst for the fourth industrial revolution, technology stocks, however they are defined, will play a significant role in investor portfolios.
David Storm, head of multi-asset portfolio strategy at RBC Wealth Management, said: “Technology is improving and data is increasing at exponential rates, disrupting the status quo.
“With the rise of a connected world already impacting organisations and industries, our view is that technology will provide a whole new set of investment opportunities.”
Millennial influence will shape the way companies operate
Set to inherit $4trn in wealth by the year 2020, according to RBC research, millennials are big adopters of technology and are driving growth in the sharing industry.
Many millennials are looking for firms that align their business objectives with a clear set of values; this generation will be a driving force behind the growth of environmental, social and governance (ESG) policies, values and strategies across industries.
“Wealth managers are seeing real growth in both interest and investment in strategies that appeal to the sustainable, purpose-driven mind-set of millennial clients,” said Storm.
“More broadly, we see more emphasis on investing in companies that are committed to improving ESG ; at the moment this is a less prominent requirement for investors, however ESG is gathering momentum as the next generation become more actively engaged with their portfolios.”
Increased longevity will boost healthcare sector and those that cater to ‘silver society’ demands
Medical advances are leading to greater longevity, with people increasingly living well into their eighties and nineties.
This increase in an ageing population has long influenced society and been an important talking point for policymakers when determining the financials of a country.
While the elderly may account for a considerable financial draw on family, business and government, they also represent a significant investment opportunity. With the over-80 age group expected to triple over the next 35 years, healthcare sectors and pharmaceuticals, are likely to account for a greater share of investment portfolios.
Storm explained: “We see this theme most clearly in countries such as the US, Japan, Canada, Australia and Singapore.
“The demographics of these markets are transforming, and with that we are witnessing greater demand on facilities to complement this. We expect investors to concentrate more on companies that provide goods and services that the ‘silver society’ demands, and which are likely to deliver positive returns over a medium- to long-term horizon.”
Tags: Investment Strategy | RBC
