Page 42 - DIY Investor Magazine - Issue 25

MEGATRENDS: HOW TO ALIGN YOUR ETF PORTFOLIO WITH GLOBAL DEVELOPMENTS
Megatrends are the major forces disrupting and reshaping our world; from technological innovation to demographic change to geopolitical shifts in power, you can surf these megatrends with an investment portfolio made up of ETFs – writes Dominique Riedl, Founder and Owner of JustETF
Megatrends are irresistible waves of change that are transforming the economic, social and political fabric of the world; they can create and destroy entire industries and markets, push new actors onto the economic stage and force reorganisation of businesses and supply chains.
Megatrende can make 20th Century Sci-Fi prophecies come true as Artificial Intelligence replaces people in the workplace and self-driving cars become a reality; investors can benefit via an investment portfolio of the new ETF products designed to harness their power.
US ETF providers pioneered with ETFs such as ROBO (robotics and automation) and HACK (cybersecurity); there’s now increasing momentum around megatrend ETFs in Europe. Almost 11 billion euros is invested in the approx 40 megatrends ETFs that are tradable in Europe (as of 30/06/2020).
The focus lies on ETFs for automation and robotics, cyber security, ageing population, global infrastructure and world nutrition.
The largest providers are iShares, Legal & General (LGIM) and Lyxor, whilst smaller providers such as HANetf or VanEck have also developed special themes in their product range.
Here are the main megatrends and some ETFs that can give you exposure in each sector:
AGEING POPULATION
Global populations are ageing due to declining birth rates and/or rising life expectancies; this has major implications for business models, especially those linked to healthcare.
Companies well aligned with this megatrend are those working on new medical treatments and pharmaceuticals targeted at age-associated diseases such as Alzheimers, cancer, arthritis, etc.
• iShares Ageing Population UCITS ETF
• iShares Healthcare Innovation UCITS ETF
• iShares Nasdaq US Biotechnology UCITS ETF
• L&G Pharma Breakthrough UCITS ETF
• HANetf GINS Indxx Healthcare Innovation UCITS ETF
TECHNOLOGICAL PROGRESS & AUTOMATION
Futurists like Ray Kurzweil believe that technological progress is accelerating exponentially; Moore’s Law posits that computer processing power doubles approximately every 2 years.
Advances in computing power and technologies like AI expand the ability of machines to compete with or complement humans; companies are racing to be at the forefront of the ‘rise of the robots’.
• iShares Automation & Robotics UCITS ETF
• L&G ROBO Global Robotics and Automation UCITS ETF
• Lyxor Robotics & AI UCITS ETF
• iShares Automation & Robotics UCITS ETF
• HANetf HAN-GINS Innovative Technologies UCITS ETF
DIGITALISATION & INFORMATION TECHNOLOGY
Digital disruption has already transformed music, media, communications, retail and financial services, and it shows no sign of slowing down. Countless start-ups are currently plotting the disintermediation of vulnerable legacy firms and hoping to join the likes of Facebook, Amazon, Alphabet, Netflix and Uber as stars of the future.
• iShares Digitalisation UCITS ETF
• WisdomTree Artificial Intelligence UCITS ETF USD Acc
• Invesco Elwood Global Blockchain UCITS ETF A
• VanEck Vectors Video Gaming and eSports UCITS ETF A
• HANetf EMQQ Emerging Markets Internet and
Ecommerce UCITS ETF
• HANetf HAN-GINS Cloud Technology UCITS ETF
• L&G Ecommerce Logistics UCITS ETF USD Acc
• First Trust Indxx Innovative Transaction & Process UCITS
ETF Class A Acc
DIY Investor Magazine | Sept 2020 42