Looking at financial markets through the traditional lens of asset classes, countries or sectors only brings a portion of the investment opportunities into focus. A thematic approach can help to identify a wider set of attractive opportunities, which tends to sit outside of traditional classification models. Thematic investments can focus on tomorrow’s investment opportunities and can be an effective source or return and diversification, asserts Portfolio Manager Dáire Dunne.
The move towards a more inclusive society is one such theme. Increasingly, we are seeing the demise of monopolies and industries that previously restricted new entrants. Sectors are also becoming more inclusive to end users as well. For example, we are seeing more universal access to health care, thanks to tech and new service models.
Another industry that is becoming more inclusive to end users is finance, where fintech innovation is making loans and insurance affordable to both providers and consumers. Lastly, in education, the provision of virtual learning is transforming how we learn. All three suggest compelling investment opportunities.
A second theme is sustainability. Unlike previous generations, much of today’s society is deeply concerned about environmental issues, be it climate change, the provision of water or social challenges like poverty and inequality. A noteworthy growth area is food. Almost 40% of food ends up as waste, and the industry needs solutions to make production more efficient, improve storage and boost recycling. Capital is already being channelled towards these causes, with many delivering returns in both financial and sustainability terms.
Another theme is innovation. Automation and robotics are already making their mark, especially in digitally advanced markets like Singapore. And it is worth noting that not all tech is being deployed in manufacturing and industrial settings. Restaurants and places of recreation are also onboard, as are providers of a vast array of automated services for homes and offices.