Thematic investing

The world’s shift from analogue to digital is well underway and seems to have only sped up since the pandemic. Just look at your own behaviours. How we work, play, shop and socialise have changed. We’re now hyperconnected, instantly, all the time, while rapid developments in artificial intelligence (AI) are also having a huge impact on our lives. Witness the exponential growth in digital content, transactions, advertising or data science in their varied forms. With vast processing power paving the way for even more complex computing, the possibilities — and risks — of digitalisation feel almost limitless.

With labour shortages growing, technology costs falling, and added efficiencies from AI, automation is advancing faster than ever. Pace of progress and adoption will vary but in overhauling most, if not all, sectors, opportunities prevail. Manufacturing is a little further along, with the automative, and food and drink sectors at the forefront. For others it’s early days. Digital networks enabling data collection, storage and analysis are also thriving as they support an increasingly automated world.

The way we consume is changing. Perhaps your own habits look different than they did a few years ago. A greater interest in health, wellness and sustainability. Discovering experiences rather than buying things. Rising living standards in emerging markets will naturally converge with those in developed markets. As younger people start earning, their priorities will differ from those of their parents and grandparents. And entertainment preferences are more personalised, seen in the shift to smartphones and on-demand models.

If you’re investing for the long term, the theme of an ageing population may feel particularly relevant. Today, more than 10% of people in the world are aged 65 or older. With rising life expectancy and lower fertility rates, the United Nations expects this figure to double to more than 20% by 2074. A society with more older people affects how everyone works, pays tax, saves and spends. Financial services and healthcare are two sectors hugely affected, each full of diverse opportunities and risks, depending where you are in the world.

Whatever your understanding of climate change, know that its impact is inevitable, hugely underestimated and cannot be ignored. From trying to minimise its effects or adapting to its consequences, enormous challenges exist. But with these challenges come opportunities to invest in the future, especially as you take a long-term view. Dynamic new sectors like renewable energy and electric vehicles, or smart buildings and agriculture are full of potential, requiring thorough analysis.

We’re living through a time of widespread geopolitical change. A growing global population and rising demand for resources are placing strain on once-seemingly stable rules-based systems. Since the Cold War, the world looks increasingly divided over identity, politics and economic regimes. And with no unity in sight, uncertainty is becoming the norm. All this means that financial decisions are being made based on concerns over security, resilience and long-term stability. We’re seeing the impact on global trade, supply chains and food or energy security, through to defence and cyberthreats. These risks are real, yet present fresh investment ideas.