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Megatrend and Thematic Investing Papers: Mar 2021

Déjà vu All over Again for Thematic Investors?

While Covid-19 has brought about some profound changes, many thematic and trend investors might suggest that all it has done is to have exacerbated and accelerated trends that were already in place.

In this selection of papers, we have highlighted several of the key investable themes and trends that asset managers are currently focusing on. These include ideas that have been directly impacted by Covid-19, such as the real estate sector, where several factors have combined to re-ignite interest in industrial property. Elsewhere, the financial effects of climate change, implications of demographic shifts and China’s increasing influence across financial markets are discussed.  

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PGIM Megatrends: Weathering Climate Change (PGIM, Feb 2021)

Drawing upon expertise from across the firm, PGIM’s new Megatrends paper investigates portfolio weaknesses and opportunities in the transition to a lower carbon world.

Podcast: The investment thesis for Bitcoin (WisdomTree Investments, Feb 2021)

For compliance reasons, this paper is only accessible in the UK & Europe

In this podcast discussion, Ari Paul, co-founder of crypto asset management firm Blacktower Capital, outlines his thinking about Bitcoin, valuation techniques and its value as an uncorrelated risk asset.

China Pulls Central Banks Into the Digital Currency Race (Lazard AM, 2021)

Lazard AM investigates the rise in popularity of Bitcoin and other cryptocurrencies and notes that several central banks, under the leadership of the People’s Bank of China, are exploring the possibilities of launching their own digital currencies.

Data – The oil of the 21st century (CFA Institute Research Foundation, 2021)

CFA Institute Research Foundation suggests that investors need to be conversant with the implications and risks associated with large scale cyber-crime.

China: Should it be its own asset class? (Informa Financial Intelligence,2020)

China ranks third by market cap in some global equity market index benchmarks and is already dominant in several Emerging Markets indices. Given the relatively uncorrelated nature of Chinese asset markets to other benchmarks, Informa explores whether China should be its own asset class.

The Future of Emerging Markets: Social infrastructure (RBC GAM, 2020)

For compliance reasons, this paper is only accessible in the United States and Canada

The Covid-19 pandemic has laid bare the massive underinvestment in both Developed and Emerging Market infrastructure. This paper from RBC GAM highlights the opportunity set that exists in Emerging market infrastructure across several areas, including healthcare, education, and housing.

Are Demographics Deflationary? (Man Group, 2021)

Man Group’s paper argues against the conventional wisdom that ageing populations tend to result in disinflation. They might, but other factors are likely to be of more significance.

Podcast: Shaping the future of healthcare (Neuberger Berman, Jan 2021)

For compliance reasons, this paper is only accessible in certain geographies

In this podcast, the contributors discuss the recent successful and very rapid development of Covid-19 vaccines. They also explore other innovative and technological advances under development in other areas of the healthcare sector, and debate whether such levels of innovation will be sustainable with government support.

Infrastructure Opportunities in the Hydrogen Economy (QIC, Feb 2021)

QIC investigates the hydrogen economy and its growth potential over the coming decade. They highlight some of the opportunities that potentially exist across the hydrogen value chain, particularly in transport and energy.

Industrial Real Estate: Ugly duckling, or swan? (Nuveen, Dec 2020)

If there is one industry that has benefitted from the Covid-19 lockdowns it is e-commerce. In this paper, Nuveen explores the industrial real estate sector and argues that secular trends (e-commerce), a mobile workforce (self-storage), and competition for space are among those trends that should underpin long-term growth in subsets of ithe sector.

A Niche Property Sector: Global data centres (PGIM Real Estate, Feb 2021)

Along with logistics, another popular growth area in the commercial real estate sector is in data centres. PGIM Real Estate explores the sector and outlines its future growth prospects.

Financial Impacts of Climate-Related Hazard Events (Moody's Analytics, 2020)

In this paper, Moody’s outlines and quantifies the negative impacts on asset or equity returns, of climate related hazard events. Munich Re have estimated the cost of 2020’s devastating climate-related events to have exceeded $200bn in 2020.

ARK Invest Big Ideas 2021 (ARK)

In this comprehensive report from ARK-Invest, they seek to identify the leaders, enablers, and beneficiaries of disruptive innovation.

Podcast: The Ageing of Japan – Capital market implications (ICMA, 2020)

Developed economies are experiencing a demographic time bomb. In this report ICMA explores the implications of a rapidly aging population upon the Japanese economy and how it is already influencing the capital markets response in the products being developed.

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