Finding value in Asia with contrarian investor Will Lam
Fund manager Will Lam of Elite Rated Invesco Asian sits down with Darius McDermott to discuss...
Spending two weeks without the internet over Christmas was both a blessing and a curse. A blessing because life slowed to a manageable pace, and a curse because I suddenly realised that, without Google, my general ability to answer questions was very limited.
What did we do before Google???
Just 15 years ago, in 2004, when Google became a public listed company and Facebook launched, many people still didn’t have a mobile phone and the thought that, within just a few years, you would be able to use one for surfing the internet, taking photos and paying bills, was beyond most people’s comprehension.
Today we don’t even need to lift a finger to find answers, order a take away or play music – we can ask Alexa to do it all for us.
The technology sector has always been one of quite rapid change and exciting opportunities. But its scope is not limited to just one sector, and the things we can do with it are forever increasing. Every day it seems, a new development is revolutionising the way we live and work.
But can the companies behind the advances transform your investment portfolio too? And what are the areas that could reward the most in the next 15 years? Here we look at four examples.
There are a number of fund managers we have met who are excited about the future prospects for the electric vehicle (EV) market, and it is easy to see why: Volvo has announced that it will only produce electric and hybrid cars from this year onwards, Toyota hopes to mass produce EVs by 2020 and General Motors wants to launch 10 different electric models next year.
As emerging markets missed out landlines and jumped straight to mobiles, there is evidence they are bypassing gas guzzlers and going straight to hybrids or EVs too.
And the revolution is not limited to the big brand car makers – there are also the suppliers of ingredients for lithium battery technology and the component manufacturers. Invesco Asian, for example, has recently topped up its commodity exposure, citing the increased demand for the materials to make batteries as one of the reasons behind the move.
With a lot of government support for the sector and society generally shifting towards automation and the so-called ‘rise of robots’, in a bid to increase societal productivity, the EV market should benefit further.
Scientists have been developing systems that mimic human intelligence for decades with varying success, but robot technology is certainly transforming the repetitive tasks previously carried out by human workers.
The self-driving car – once a feature of sci-fi movies – is already a reality: half of the truck fleet working in Rio Tinto mines drive themselves already – and in three years it will be 100%.
Elite Radar fund, Smith & Williamson Artificial Intelligence, looks for companies that not only develop artificial intelligence software but businesses using it to transform their enterprise. The fund managers even use such software to help in their stock selection process.
Healthcare is another sector which is benefiting from technology that is disrupting conventional medical practices, to deliver the holy grail of better healthcare for less money.
For example, Quotient, a company held in Polar Capital Global Healthcare Trust, is developing a blood-screening platform, MosaiQ. While there are still regulatory milestones to reach, it should be the world’s first fully-automated testing solution that will allow for rapid identification of donor and patient blood – making matching easier and reducing the risks associated with transfusions.
Technology has also revolutionised the way consume. From online grocery shopping (I, for one, don’t miss dragging a toddler round Tesco once a week) to next day delivery of items from Amazon and booking flights and holidays, pretty much everything is now done remotely.
And there are always new disrupters arriving on the scene and taking market share. Take for example, Airbnb. As Chris St John, manager of AXA Framlington UK Select Opportunities, pointed out recently, it took the ‘Ebay of hospitality’ just three years to enter 89 countries. It took the Hilton Group 72 years to enter 69.
But spotting these opportunities early, can key in this area of investments.
Tom Slater, manager of Scottish Mortgage Investment Trust, admitted recently that he met Airbnb’s co-founder, Brian Chesky, back in November 2011, but didn’t “spot the magic”. It wasn’t until July 2015 that the finally took the plunge – when the company was already worth 20 times as much.
Airbnb has created a new type of accommodation that has displaced cheaper hotels and B&Bs, while at the same time become a market place for those wanting to rent out their homes.
While ‘to Airbnb’ may not become a verb any time soon, the company has said it may well IPO this coming year.