Global lockdowns have accelerated the adoption of new technologies. Senior investment strategist Daniel Morris discusses the trends and opportunities with Pam Hegarty, senior portfolio manager and equity analyst for disruptive technologies in our Boston office.
Pam: The digitalisation trend has moved forward with a leap, benefiting from the stay-at-home measures to deal with the coronavirus pandemic and the boost these gave to e-commerce, remote working and other tech areas. Last week, Satya Nadella, Microsoft’s chief executive officer, referred to “two years of digital transformation in two months.”
We see several key trends:
Pam: Uncertainty remains, both about the duration of the pandemic and the severity of the recession. Stock markets might be too optimistic about the timing and strength of an economic rebound. Our strategy is to stay focused on our secular growth themes:
We aim to maintain a balanced portfolio by owning both defensive positions that could fare well during periods of heightened volatility and companies that have sustainable business models and exposure to long-term secular growth themes, but may face a more challenging short-term outlook.
To this end, we hold slightly higher cash positions at the moment and remain flexible to buying stocks linked to the above themes should their valuations come down due to volatility.
Pam: The pandemic and resultant economic recession shine a spotlight on societal issues where technology can create solutions:
There are also industry-specific opportunities:
We have a clear and disciplined approach focusing on the secular growth themes within disruptive technology that will carry our economies and societies into the future.
We are currently going through a period of profound change that offers numerous opportunities for investors to position their investment portfolios for further growth in disruptive technology.
Further reading on disruptive change, innovation and technology:
Also listen to the Market Weekly podcast with Pamela Hegarty, ‘Riding the digital transformation with US equities’.
Any views expressed here are those of the speakers 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.
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.