Page 43 - DIY Investor Magazine - Issue 25

CYBERSECURITY
Society’s increasing reliance on the internet simultaneously increases the threat of potentially devastating cyber-attacks by hackers.
IT security is big business as attacks are more widespread, sophisticated and damaging; increasing awareness of these risks and the real harm they can do means that cybersecurity companies will be in demand for the foreseeable future.
•
• L&G Cyber Security UCITS ETF
• iShares Digital Security UCITS ETF USD (Acc)
• iShares Digital Security UCITS ETF USD (Dist)
GLOBAL INFRASTRUCTURE DEVELOPMENT
Rapid urbanisation and global population growth create huge opportunities for the construction and maintenance of infrastructure.
UN forecasts more than two-thirds of the world’s population will live in urban areas by 2050 –it was less than 50% in Y2K; as 2 billion more people move to the cities, the need for sustainable and scalable infrastructure will become paramount.
• SPDR Morningstar Multi-Asset Global Infrastructure UCITS ETF
• iShares Global Infrastructure UCITS ETF
• Xtrackers S&P Global Infrastructure Swap UCITS ETF 1C
• iShares Emerging Market Infrastructure UCITS ETF
NOURISHMENT OF THE GLOBAL POPULATION
Rising populations, income and industrialisation increases the demand for staple foods and clean water; when adding unequal distribution of water resources and growing pressure on our existing reserves from climate change, contamination and overuse, this results in the megatrend nourishment of the global population.
• iShares Global Water UCITS ETF
• Lyxor World Water UCITS ETF D-EUR
• iShares Agribusiness UCITS ETF
DIVERSITY & EQUALITY
The gender gap continues to diminish as women increasingly make their mark in political, social and commercial institutions; it was considered closed in education and health, according to a study by the World Economic Forum.
Greater awareness and support for the integration of minority groups has even resulted in investments reflecting this trend.
• Lyxor Global Gender Equality (DR) UCITS ETF C-USD
• iShares Thomson Reuters Inclusion and Diversity UCITS
ETF USD (Acc)
• UBS ETF (IE) Global Gender Equality UCITS ETF (USD)
A-acc
• UBS ETF (IE) Global Gender Equality UCITS ETF (hedged
to GBP) A-acc
MEGATRENDS MAY NOT GIVE YOU THE EDGE
Megatrends are having a huge impact on the world and whilst ETFs are ideal for investing broadly and cost-effectively in global financial markets, some question targeting the megatrend phenomena to boost your returns. Tilting your portfolio towards particular sectors may not reward you for the risk in the long run and there’s no guarantee you will outperform a more diversified, passive investment strategy. Things to consider:
• Scientific studies show that potentially above-average industries cannot be reliably identified in advance; they are unlikely to outperform the market in the long term.
• For an investment in young industries to be worthwhile stocks have to be cheap, but megatrend companies already in the focus of investors are expensive. To make the investment particularly worthwhile, stocks in megatrend ETFs would still have to be significantly undervalued today; ‘megatrend‘ and ‘hype‘ often fall in the same breath so the probability of this happening is low.
• Megatrend ETFs are somewhat more expensive because it takes much effort to examine the companies in line with the trend. A cheaper alternative could be sector ETFs into which megatrend companies grow over time.
• A narrow selection of individual titles is detrimental to diversification, increasing the risk of equity investments. The megatrends ETFs currently available on the market generally contain a relatively narrow range of 25 to 150 shares.
If you would still like to invest in megatrends then here’s a list of
Megatrend ETFs
Our tip: Megatrends and other investment themes can also be found with our new theme filter in the ETF search.
43 DIY Investor Magazine | Sept 2020