Thematic investing: why investors are rethinking their investment journey

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The rise of thematic investing

The booming pet economy is just one of the investment themes that investors can capitalize on for better returns. Once reserved for institutional investors and high net worth private clients, thematic investing is gaining popularity with traditional investors in Singapore and across Asia.

Thematic investing is a form of investing that aims to identify “macro level” trends or themes disrupting the global economy. Technological innovation, regulation and socio-economic factors often trigger or catalyze these themes.

Many have found that in a world of fast and furious rate hikes and ongoing geopolitical tensions, it pays to take a long-term view and ensure portfolios can adapt to current and anticipated challenges.

Identification of investable themes

Take urbanization for example. As more and more people move to cities, urban infrastructure must adjust and adapt to meet growing needs. There are more than 600 smart city projects around the world, led by Asia. This phenomenon paves the way for new growth for raw material manufacturers, construction companies, equipment suppliers and technology providers, which can open up new investment opportunities in the sector.

Here are some ways to invest thematically:

  1. Identify the megatrend
  2. Find a sweet spot – an investable theme
  3. Focus on real actions in each theme that can generate alpha returns

The Covid-19 pandemic as an accelerator

The Covid-19 pandemic appears to have accelerated most of the themes identified by Allianz Global Investors, from health technologies to digital life and next-generation energy.

Health technologies, such as wearable biosensing technology with a cloud database, which were already spreading before the pandemic, will play an increasingly important role in the health sector. The global healthcare IT market is expected to reach US$821.1 billion (S$1.2 trillion) by 2026, from US$326.1 billion3 Last year.

This growth is the result of government mandates and support for healthcare IT solutions, the growing use of big data in healthcare, the high returns on investment associated with these solutions, and the need to reduce rising healthcare costs. health.

The pandemic has also given a boost to digital life. Digital life spans a whole universe of opportunity, including e-commerce, social media, video streaming, digital banking, e-sports, online education, and remote working.

Investing in real-world change

But alongside technological progress, there is also a greater need for solutions to “save the planet”, whether in terms of renewable energy to reduce temperatures and fight climate change (33 trillion dollars4 possibility by 2050) or technologies to clean the air, land and water. These will become increasingly urgent as investors demand alignment with the United Nations Sustainable Development Goals.

A leader in thematic investing

Allianz Global Investors, a global investment management firm, spares no effort to identify the seven high growth themes that are shaping the future. It employs active management and is unconstrained in its research, adapting as new themes emerge and older ones peak.

Find out how you can invest in the next big thing.

Footnotes :

1 La Trobe University, August 2022
2 Forbes Advisor survey, February 2022
3 Health IT report by Markets and Markets, June 2022
4 IRENA: “Global energy transformation, a roadmap until 2050”, April 2019

Disclaimer:

The information contained in this document is based on sources which we believe to be accurate and reliable as of the date on which it was prepared. We reserve the right to revise any information herein at any time without notice. No offer or solicitation to buy or sell securities and no investment advice or recommendation is made herein. When making investment decisions, investors should not rely solely on this publication, but should seek independent professional advice. There is no guarantee that these investment strategies and processes will be effective in all market conditions and investors should assess their ability to invest for the long term based on their individual risk profile, particularly during periods of market downturn. Past performance, or any prediction, projection or forecast, is not indicative of future performance. Duplication, publication, extraction or transmission of the content in any form is not permitted. This announcement has not been reviewed by the Monetary Authority of Singapore (MAS) and is for informational purposes only. The issuer of this advertisement is Allianz Global Investors Singapore Limited (79 Robinson Road, #09-03, Singapore 068897, company registration number 199907169Z).

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