Digitisation, energy transition, climate, and globalisation. Omnipresent buzzwords in constant usage nowadays. When mega trends are quoted in connection with investments, the reference is often to topics and developments that can facilitate significant social change.
How can the standard of living be kept in the future? What are the growth regions, and what forms of innovation and technological developments promise well for the years and decades ahead? 44% of Austrians regard digitisation as the biggest driver of society, closely followed by technological progress for example in medicine and Big Data (43%).
Only about a third considers automation (33%) or energy transition (29%) as strongly influential. According to a representative study by Integral, commissioned by Erste Asset Management (Erste AM), demographic changes only worry about 18% of the respondents.
Majority of respondents can see positive effects of mega trends on their lives
41% of Austrians can basically see a positive effect of digitisation on their lives, with only 14% worrying over a negative impact. In particular, respondents in the age bracket of 16 to 29 believe that digitisation will have a rather positive or very positive effect on their job and social contacts.
“There is a good reason why mega trends hold a high profile in public perception. We are at the outset of exciting developments: sustainable sources of energy, autonomous cars, artificial intelligence or virtual reality in the industrial and medical sector already show their enormous potential,” as Heinz Bednar, CEO of Erste AM, points out.
Mega trends and sustainability are the driving forces on the markets
Topics such as automation, the internet of things, or artificial intelligence illustrate the fact that new business models have emerged whose economic potentials have not yet been fully exhausted by any stretch of the imagination.
“The technology sector provides without a doubt the strongest impulses. Ground-breaking developments are imminent in information technology, biotechnology, and environmental technology,” explains Gerold Permoser, Chief Investment Officer Erste AM. The constantly growing world population and its huge leaps in lifestyle habits are the main driver of technology.
According to the UN, there might be 10 billion people on Earth by 2050 (2019: ca. 7.7 billion). Climate change and the constantly growing world population demand an alternative to traditional forms of energy. In addition to new sources such as wind and solar power, industries around themes like energy efficiency and energy supply (intelligent grids) are emerging. Sustainability is therefore important to 79% of Austrians (according to their own declaration) in an ESG context (environmental, ethical, social).
Investing in mega trends
Erste Asset Management has just initiated the subscription phase for the ERSTE FUTURE INVEST fund. This is an actively managed equity fund: selected individual shares or specialised equity funds cover five specific mega trends.
Given that mega trends do not follow typical patterns, the investment strategy of the fund is actively managed on this basis. The allocation into equities and funds is adjusted on an ongoing basis as well; the portfolio will focus on attractive, but – to many investors – little known mid-cap companies in addition to blue chips.
“Not every hype or trend turns into a mega trend. A mega trend is a development that should last for many years. We are talking about 15 years or more, maybe decades,” as Permoser concludes.