Thematic investing for 2030

2030 may seem a long way away, but investing is all about the future – finding the companies that are going to be successful and sharing in their good fortunes.

As Capital Group’s Martin Romo pointed out recently: a lot can happen in 10 years, particularly when a period of extreme adversity spurs innovation and behavioural changes to help address some of the era’s biggest problems.

“Ten years from now I think we will look back on COVID as our generation’s ‘Pearl Harbor moment’”, he said. “When Pearl Harbor happened, the U.S. artillery was 75% horse drawn. Let me say that again: In 1941, three quarters of the U.S. artillery depended on horses. Yet by the end of the war they had entered the atomic age. That incredible transformation sparked a period of innovation and growth in the U.S. economy that lasted for decades.

“Fast forward to today and we’ve already seen an almost magically rapid development of COVID vaccines at a speed few thought possible. COVID could be the trigger that spurs us to tackle other critical issues like the cost of healthcare, education and housing. In 2030 we may be living, working, studying and playing in a radically new world.”

There are a number of exciting themes that could lead to a very different world in the next decade – climate change and decarbonisation; the rise of electric and autonomous vehicles; cloud computing; cyrptocurrencies and delivery drones to name a few.

But which themes should investors pick and how can they avoid getting carried away by the hype? One simple way is to invest in funds that are embracing all or most of these themes, therefore diversifying risk and giving you exposure to more opportunities.

Here are five examples:

Five funds investing in long term themes

1. LF Montanaro Better World has a simple philosophy; invest in companies you can understand, buy things which are growing, back quality management, engage with your companies and don’t over trade. The team is looking for firms creating a positive impact. To identify these companies, it has six impact ‘themes’: environmental protection, the green economy, healthcare, innovative technologies, nutrition and well-being.
2. M&G Global Listed Infrastructure fund looks for a balance of growth and income from three key areas of the sector, for example: economic, social and ‘evolving’ infrastructure. This means investments can include anything from utilities and toll roads to renewable energy health, education and civil buildings, as well as mobile towers, data centres, payment companies and royalties.
3. AXA Framlington UK Mid Cap. Manager Chris St John will look for companies that are high quality, that can show sustained profitability, and that exhibit future growth potential. The first stage of Chris’s process is a thematic overview looking at key themes that should drive growth going forward, such as increasing life expectancy, digital transformation and a low-carbon economy.
4. Liontrust Sustainable Future Global Growth. This fund’s process starts with a thematic analysis designed to uncover emerging trends and long-term structural growth themes. These range from the development of personalised medicine to the transition to lower carbon fossil fuels. Three mega trends have been identified, with strong and dependable growth prospects. These are: better resource efficiency (cleaner), improved health (healthier), and greater safety and resilience (safer).
5. Guinness Global Innovators. As the name suggests this fund is all about finding, and investing in, innovative and disruptive businesses which are changing the world in which we live. The team creates its investment universe by identifying nine innovation themes. These themes are: advanced healthcare; artificial intelligence and big data; clean energy and sustainability; cloud computing; internet, media and entertainment; mobile technology and the internet of things; next generation consumer; payments and FinTech; robotics and automation.