The start of a new year is always a good time to think about investment themes that could power a buy-and-hold strategy in the years ahead. By identifying powerful long-term structural trends likely to have a big impact on the world, an investor can position their portfolio to capitalise.
Here, I’m going to highlight five powerful investment themes I’ll be betting on in 2021 and beyond. I believe they all have the potential to power my portfolio higher.
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One investment theme I’m very bullish on for 2021 and beyond is the growth of online shopping. E-commerce boomed in 2020, due to lockdowns. Looking ahead however, the online shopping industry is forecast to get much bigger. According to Grand View Research, the market is set to grow at an annualised rate of about 8% between now and 2027.
To capitalise, I’ve bought shares in retailers Amazon, ASOS, and Boohoo. I’ve also bought shares in warehouse company Tritax Big Box, logistics company Clipper, and packaging specialist DS Smith. This gives me broad exposure to the industry.
Linked to online shopping is the growth of digital payments. As we buy more online, we’re using cash less and paying for goods and services digitally. Looking ahead, there’s a huge growth runway here. Today, 80% of the world’s transactions are still in cash.
My two main plays here are Mastercard and PayPal. Both are leaders in the digital payments space. I also own Apple which has Apple Pay.
Video gaming has come a long way in recent years. Not so long ago, it was a niche hobby. Now, it’s one of the world’s most dominant forms of entertainment. Going forward, gaming is likely to get a lot bigger. Driven by advances in technology, growth in mobile gaming, and the growth of e-sports, the industry is expected to grow by around 13% per year between now and 2027.
My main investment for this theme is Keywords Studios. It’s a fast-growing company that offers technical services to game developers. I also have a position in Microsoft. It owns Xbox and now offers subscription gaming services.
Cloud computing is another area of technology I expect to continue growing in 2021. Nearly all technologies we use today are underpinned by cloud technology. Between now and 2025, the industry is expected to grow at around 18% per year. To capitalise, I’ve built up positions in Amazon, Microsoft, Alphabet, Sage, and Okta.
Finally, there’s the ‘gig economy’. This could be the theme I’m the most excited about. In the past, the gig economy was associated with low-skilled jobs, such as delivery work. Today however, it’s a different story. Thanks to advances in technology, one in three professionals are now quitting the nine-to-five lifestyle and actively choosing to freelance. Overall, this market – which is set to be worth nearly $500bn by 2023 – is growing at three times the rate of the traditional employment market.
In order to capitalise on this exciting theme, I’ve built up a sizeable position in Upwork. It operates one of the world’s largest freelance employment platforms. This stock performed well for me last year, rising from $12 to $40. Yet the market-cap is still small at under $5bn. I think the growth potential here is enormous.