Thematic Investing: Megatrends in Practice

Turning Megatrends into Investable Themes

Megatrends are pervasive forces that can affect the investment landscape for extended periods of time (climate change, demographics, etc). But megatrends are not themselves investable until they are translated into a specific theme that can be implemented within a portfolio. These themes can also be quite broad, crossing sectors, industries, and potentially asset classes.

Within this list of papers there are a multitude of investable themes, generated by some of the world's top investment management organisations, with perspectives ranging from medium term to the next 100 years. We've also included several of the papers from last year's Savvy Awards category, "Best Megatrends Paper of 2019."

THEMATIC INVESTING

Thematic Investing: Seeking independent sources of excess growth (Wellington, 2020)

Wellington Management looks at secular trends such as climate change, aging populations, and automation, in order to explore the benefits of thematic approaches to portfolio management.

Thematic equities: their use in a diversified portfolio (Pictet AM blog, 2019)

In this lengthy blog article, Pictet Asset Management looks at three different use-cases for thematic equities within equity portfolios.

6 Investment Themes for 1H 2020: Signs of stabilization (Manulife IM blog)

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

Manulife Investment Management presents 6 investment themes for the first half of the year, including an assessment of the Asian economic outlook and ways to find value in a late-cycle economy.

Investing for a New Decade (PGIM, Jan 2020)

Will direct lenders continue to fill the void left by large banks? How will DC plan participants find income in retirement? PGIM looks at 6 investing themes for the next decade.

The 21st Century Portfolio*: Investing for the grandchildren (Invesco, 2019)

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

Invesco recommends four thematic allocations for the 21st century: carbon reducing technology, Africa, labor replacing technology, and carbon capture.

The Idea Multiplier: An acceleration in innovation is coming (Vanguard, 2020)

Vanguard captures the momentum of idea diffusion within their proprietary metric - the Idea Multiplier, and uses it to predict that a significant increase in productivity is coming.

The influence of demography on inflation and nominal rates (UBS GWM, 2019)

The authors use demographic data to highlight trends in inflation and nominal interest rates within several countries.

Retail disruption: which markets have the highest risk? (Nuveen, Jan 2020)

Nuveen highlights which countries are most at risk for retail disruption. Know of any exogenous factors that might add fuel to this fire over the coming months?

The Data Science Revolution (Neuberger Berman, 2020)

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

Neuberger Berman examines the data science revolution within the asset management industry, and how data science, when coupled data access, and processing power can lead to rich results.

Indexing Thematic Megatrends (Qontigo, 2019)

This paper introduces STOXX indices that are structured around thematic investments. It includes info on their construction methodologies and the rationale behind each theme.

Asset Classes Views: Detecting tipping points (Amundi AM, Feb 2020)

For compliance reasons, this paper is NOT accessible in the United States

This Amundi Asset Management paper is predominantly on long-term return forecasts for the major global asset classes, but it also contains a section on several long-term themes.

A new world order: China's place in the world (UBS AM, Jan 2020)

This report by UBS Asset Management looks at China and examines its place in the world, mainly the investible trends that are driving it.

BEST MEGATRENDS PAPERS OF 2019

Future-Proofing Your Asset Allocation in the Age of Mega Trends (BNY Mellon/CREATE-Research, 2019)

Winner - Best MegaTrends Paper of 2019 - Savvy Investor Awards. The authors discuss some of the largest secular 'supertanker' trends like AI and climate change.

Five things you should know about trends investing (Robeco, Mar 2019)

Highly Commended - Best MegaTrends Paper of 2019 - Savvy Investor Awards. This paper aims to show the reader how to monetize megatrends and select companies that are primed to be structural winners.

Artificial Intelligence: Real opportunity (Franklin Templeton, 2019)

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

Highly Commended - Best MegaTrends Paper of 2019 - Savvy Investor Awards. Companies with proprietary datasets or restricted access to data may extract the greatest benefits from the AI revolution.