The start of a new decade is always a good time to think about investment themes that could power a buy-and-hold strategy over the next 10 years. By identifying powerful long-term structural trends that are likely to have a big impact on the world, you can position your portfolio to capitalise. With that in mind, here’s a look at four investment themes I’m bullish on.
The world’s ageing population
The world’s ageing population is a theme that is hard to ignore – virtually every country in the world is experiencing growth in both the number and proportion of older people in their populations. According to the UN, by 2030, there will be roughly 1.4bn people aged 60 and over worldwide, up from 900m in 2015.
An ageing population has implications for many industries. Healthcare is one industry, in particular, that should benefit significantly. Wealth management and travel are other industries that could benefit. Stocks that I believe could do well as a result of the world’s ageing population include joint replacement specialist Smith & Nephew, wealth manager St. James’s Place, and leisure specialist InterContinental Hotels Group.
Disruptive technology has had a big impact on the world over the last decade and I expect this trend to continue throughout the 2020s. Right now, we’re in the midst of a technology revolution (often called the fourth industrial revolution) and I believe it has a long way to go. This is probably the theme I’m most bullish on.
Sub-sectors of this theme that I like include financial technology (FinTech), robotics and automation, and artificial intelligence. Over the next 10 years, I think these technologies are likely to have an extraordinary impact on the world. For exposure, I’d look at funds that have exposure to both large technology companies such as Alphabet (Google) and Microsoft, as well as smaller niche technology companies, such as the Polar Capital Global Technology fund.
I’m also expecting sustainability to become more of a focus in the 2020s. In recent years, the world has begun to realise how much damage we have done to the environment in the past and as a result, many people are now far more aware of the products they buy and the food they eat (meat alternatives is an interesting sub-theme here). Interest in sustainable investment strategies has increased significantly too. I think this is just the tip of the iceberg, though. To capitalise, I’d look at sustainable funds, or companies that have sustainability at the core of their philosophy such as packaging specialist DS Smith.
Rising wealth in the emerging markets
Finally, there is the rise of wealth in emerging markets. Higher incomes in countries such as China, India, Indonesia and Brazil are likely to have implications for a number of industries. These include consumer goods (as disposable incomes increase, consumers want products that can improve the quality of their lives), financial services (rising wealth means more demand for savings and insurance products), healthcare, and travel. To capitalise, I’d look at companies such as alcoholic drinks manufacturer Diageo, which expects an additional 750m emerging market consumers to be able to afford international-style spirits by 2030; Prudential, which is now focused on the financial needs of those in Asia; and Unilever, which generates over 50% of its sales from emerging markets.
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Edward Sheldon owns shares in St. James's Place, Ds Smith, Diageo, Unilever, Prudential, Microsoft, and Alphabet and has a position in the Polar Capital Global Technology fund. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. The Motley Fool UK owns shares of and has recommended Alphabet (C shares), Microsoft, and Unilever. The Motley Fool UK has recommended Diageo, DS Smith, InterContinental Hotels Group, and Prudential and recommends the following options: long January 2021 $85 calls on Microsoft and short January 2021 $115 calls on Microsoft. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.