Global Megatrend Investing: Feast or Famine?

Megatrend investing is the concept of an investor or fund manager looking to anticipate long-term global trends that could transform our world for decades to come.

Interpreting these trends provides investing themes like sustainability or resource scarcity.

Other common megatrends include urbanisation, climate change, artificial intelligence, shifting supply chains, and renewable energy transition.

Some of these are on us already. Others will take time to play out. Many significant changes happen gradually and we may not always grasp their potential to transform the world as they are developing.

Why are megatrends important to the investor?

Markets are forever evolving with new trends as are the constituents that comprise markets. To many, the advent of artificial intelligence was upon us from nowhere. To others, including Elon Musk and Sam Altman, AI was on their radar for many years.

Microsoft is an example of how AI rapidly changed the dynamics of this company as it moved to lock in a large investment in ChatGPT and its stock price surged.

Anticipating megatrends provides rewards for the prescient investor.

Thematic ETFs

The ASX provides opportunities for spotting global megatrends for the sleuth.

There are several stocks as well as fund managers of ASX traded Exchange Traded Funds (ETFs) that have transformed megatrend ideas into a themed reality.

The ETF fund manager Betashares believes that three overarching megatrends are shaping the future.

Demographic change

Technological innovation

Climate change

Global X ETF fund managers have selected three major megatrends that it believe will play out with significant opportunities ahead.

Artificial intelligence

Uranium and nuclear energy’s role in decarbonisation.

Shifting income mobility in emerging markets.

Morgan Stanley has forecast that artificial intelligence is set to become a $3 trillion industry in the next several years.

Companies that supply the critical inputs needed for the development and use of AI, such as semiconductors, are also likely to benefit.”

Generative AI is an evolving sub-trend that has many companies aglow. How will it play out? Will machine learning algorithms that can use existing text, images, audio, or video to create new content be content that is really that interesting or useful?

If the underlying content isn’t, then ML won’t be much use.

There are many more investing megatrends. We have highlighted just some in this article.

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