Thematic investing, which centres on the long-term forces that shape consumer needs and industries, is a way for investors pivot away from traditional 60-40 portfolios to a broad and diversified set of opportunities that can create market-beating returns spanning several generations.
Given that there is now ‘more upside than downside’, Guy Davies, deputy head of investments, tells Daniel Morris in this Talking heads podcast that he believes this is a good time to set up or build positions in thematic stocks.
At a time when growth is scarce, he argues that areas enjoying strong support – be it from the public, policymakers or regulators – are valuable. He also highlights the eventually deflationary nature of themes such as the internet of things and blockchain, the carbon transition, wellness and healthcare, and fintech.
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Please note that articles may contain technical language. For this reason, they may not be suitable for readers without professional investment experience. Any views expressed here are those of the author as of the date of publication, are based on available information, and are subject to change without notice. Individual portfolio management teams may hold different views and may take different investment decisions for different clients. This document does not constitute investment advice. The value of investments and the income they generate may go down as well as up and it is possible that investors will not recover their initial outlay. Past performance is no guarantee for future returns. Investing in emerging markets, or specialised or restricted sectors is likely to be subject to a higher-than-average volatility due to a high degree of concentration, greater uncertainty because less information is available, there is less liquidity or due to greater sensitivity to changes in market conditions (social, political and economic conditions). Some emerging markets offer less security than the majority of international developed markets. For this reason, services for portfolio transactions, liquidation and conservation on behalf of funds invested in emerging markets may carry greater risk.