(This article comes from AMP Henderson Global Investors Limited’s SRI Team.)
A buzz-word in investment management these days is “megatrends”. It’s a term which describes major shifts in how people live, work and play that are shaping the world’s future.
An example is the rate of population growth. Fact: the world’s population more than doubled between 1950 and 1997 from 2.5 billion to 5.8 billion.
Another is the aging of populations. Fact: in Australia in 2001 the median age of the population is 35.5 years. It is forecast to rise to 41.3 years by 2026. The ratio of the aged people (over 65) to those of working age is expected to increase from 23% to 39% in the 25 years to 2026.
A third is the energy addiction of the developed world. Fact: the US constitutes 4% of the world’s population and uses 25% of the world’s crude oil (as well as other resources). Other areas where we can see developing megatrends are the technological and biotechnical revolutions, the use of renewable energy, the rise and fall of political movements, the globalisation of trade and the retreat of the welfare state.
Megatrends can often provide insights for investment opportunities. The trick for a fund manager is to spot these megatrends as they are emerging and identify ways of benefiting from them.
Investing in Industries of the Future
There is clearly a global desire to make economic growth more sustainable. That means ensuring our generation lives in a way that doesn’t harm the living standards of future generations. To do this we must, for example, preserve the environment and to do this we should be using much more renewable energy.
Many companies are creating goods and services that make for a sustainable world. The businesses which operate in such areas are forming what we call “Industries of the Future”. These industries are in tune with and well positioned to benefit from the new world which is being influenced by megatrends. They are industries which can offer solutions.
AMP Henderson’s approach is about recognising megatrends which can impact Socially Responsible Investment (SRI) opportunities. For example, the demographic and population aging megatrends will strongly influence some industries of the future we have already identified – such as healthcare and water management.
We use our in-house research capabilities to analyse megatrends which then helps us to identify what we believe will become the industries of the future. Our aim is to invest in the best companies in these industries of the future. They may be from any of the following sectors: healthcare, communications, mass transport, renewable energy, education and training, information technology, water management and engineering, pollution control and environmental management.
Contact Capital Financial Planning Limited for more information on Socially Responsible Investments.
If you have over NZ$350,000 to invest and want truly impartial advice, contact us to find out how we can put your money to work to fund your important goals.
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