Investment Professionals

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Investing in megatrends

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Investors seeking growth in their portfolios need to look outside the box for opportunities in today’s market. The so-called blue-chips of the past are not necessarily the growth drivers of today or the future. Investing in megatrends may offer an effective and sustainable approach to growth in investor portfolios.

Megatrends are universal socioeconomic, environmental or technological forces that change the way we do things . These trends tend to be sustained over longer periods, in some cases, 20 years or more and based on known patterns and pressures . Investing in megatrends has become increasingly accessible in recent times due to the abundance of managed investments focused on them.

There are a range of megatrends influencing the world. A few of these are covered below.

1. Virtual connectivity and digitisation

The internet is becoming faster and cheaper to access, with close to 60% of the world’s population already users . There are a range of opportunities following from the movement online, such as ecommerce or online entertainment and gaming. Even data storage and security are becoming major concerns. Access to this megatrend can be broadly through sectors like technology that service and fuel this trend, regions with companies dominating this trend, such as the US or across Asia, or via niche subthemes like robotics and artificial intelligence.

Products in focus:

> ETFS Morningstar Global Technology ETF (TECH)

> ETFS ROBO Global Robotics and Automation ETF (ROBO)

> ETFS FANG+ETF (FANG)

2. The growth of the Asian middle-class

Two-thirds of the world’s middle-class population are expected to reside across Asia by 2030 and this offers potential for a range of industries, such as luxury goods, tourism, education and healthcare. Many global players have turned their focus to targeting consumers in this region, while regionally based companies like Alibaba or Infosys Ltd are well positioned for future growth. Investors can consider sectors like healthcare which will benefit from the growth or take a more concentrated approach by investing across Asia or within specific countries, like India.

Products in focus:

> ETFS Reliance India Nifty 50 ETF (NDIA)

> ETFS FANG+ETF (FANG)

3. Limited resources

Ongoing population growth and climate change are placing pressure on available resources including minerals, energy, water and food sources. This has forced an evolution in terms of new products, how we consume and how companies interact with us. Renewable energy and battery storage is one area tipped to grow off the back of this megatrend. Many larger corporations have also started to adjust their operations too, for example, Amazon CEO Jeff Bezos pledged $10bn to fight climate change through the Bezos Earth Fund . Investors may consider sub-themes like battery technology or electric cars, or they could consider industries which may experience higher demand on the basis of restricted resources like agriculture.

Products in focus:

> ETFS Battery Tech and Lithium ETF (ACDC)

> ETFS FANG+ETF (FANG)

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