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Picking the right mix for your investment portfolio has often been equated with crystal ball gazing. The COVID-19 pandemic made this process even more unpredictable with uncharacteristic movements in the stock market, that sometimes did not reflect the state of the economy or the country. The slew of regulations and fiscal packages that the pandemic prompted have made it even harder for the average investor to keep track of all the various factors that will now affect their investment portfolio.
The CEO of Goldman Sachs Asset Management International, Fadi Abuali, shared his reading of the trends that are reshaping investment strategies in 2021 and in the years ahead.
Here are Abuali’s top four trends, discussed in an episode of The Daily Check-In earlier this year.
You’ve probably heard about ESG investments and how the financial world is increasingly interested in social equity and ecological balance. These themes are expected to remain key investment drivers, especially with fiscal packages in the United States, Europe and China focusing on making their economies greener and more sustainable. Expect to see more government funding for renewable power, modernizing grid infrastructure, electrical vehicles and advances in transportation infrastructure.
In reflection of the governmental push and consumer demand for ESG-related products, companies in the private sector are innovating in these areas. Unique solutions for key environmental challenges, automation efficiencies, renewables, sustainable transportation, recycling, packaging and plant-based proteins are all becoming ripe with investment potential.
Technology was already an attractive area of the market pre-COVID. But with the demand for remote work and online transactions multiplying exponentially during the pandemic, technology has become an even hotter focus area for investors.
Some key beneficiaries in this investment boom are likely to be next generation identity, cyber security, software as a service, cloud platforms and storage data centers. The 5G internet roll out in multiple countries around the world over the next several years will bring significant returns to companies involved.
The pandemic forced the public and private sectors to join hands and work in ways they’d never done before. Abuali forecasts a lasting, positive impact of this collaboration on the healthcare industry. “Equally, as universal access to healthcare becomes and remains a focal area of discussion post-pandemic, improving efficiency of access and cost effectiveness to these services will be key to making this a reality. So, advancements in telemedicine, in e-doc solutions will all be helping this process. And therefore, create some considerable potential upside for investors,” he says.
As regulatory barriers soften and access to capital grows, we are likely to see the emergence of many new telehealth solutions for challenging diseases. Consequently, specialties like genomics, gene sequencing, gene editing, gene therapy and related supply-side manufacturing companies will offer terrific investment opportunities.
Yes, you’ve heard it all before. Millennials are changing how people shop, eat, dress et al, ad nauseam. It’s obvious then, that they would have an impact on how investments are made as well.
Here’s the kicker—It’s not just millennials that are behaving like, you know, millennials. It’s everyone else too.
As Abuali says, “With the migration of so many of us online in the last 12 months during the pandemic, we've accelerated what would have taken 12–18 months into, really, a matter of weeks. And we've all adopted millennial behavior.”
As the rest of the investing class morph into pandemic-induced, pseudo-millennials who are more tech-savvy, more health-conscious, more experience-oriented than before. All the activities that were off-limits during the pandemic that appeal to this generation are poised for a rebound. This includes travel, restaurants, concerts and more, complimenting already attractive medium-growth trends in these sectors.
In recent experience, the best-performing investors have one thing in common—an ear to the ground and the nimbleness to adjust their investment strategies to reflect major structural changes in the investing landscape.
Not sure how to make those tweaks to your portfolio? Ayco can help. If you have access to Ayco’s services, reach out to an Ayco advisor today to discuss the best options for your personal situation.
By Brandon Ross
Insights from Ayco InnerCircle 2021