When working to create a successful thematic index, fund managers research Megatrends. The success of thematic investing depends heavily on identifying these far-reaching economic, social and political developments. So what are Megatrends, and how do we identify them?
What are Megatrends?
Megatrends of powerful, overarching changes that can make lasting, sometimes revolutionary transformative effects on the world. Megatrends are the forces that have been driving and changing the way human beings live throughout the centuries. Good examples are the development of agriculture, electricity, the evolution of the mechanized industry, the emergence of the internet, and more.
Getting ahead of the game
The trick to capitalizing on a Megatrend is the ability to identify them and correctly predict their far-ranging, long-term consequences and developments. It can be all too easy to look at a popular fad and mistake it for a Megatrend. The trend needs to have the potential for far-reaching consequences – something that could perhaps transform every aspect of our business, social and political lives in the future. An investor considering the potential of the “internet” back in the 1990s may not have had the ability to understand how this technological achievement would ultimately come to pervade and transform every aspect of our daily lives. Those who were able to see to foresee this knew they were dealing with a Megatrend.
When looking for a Megatrend, keep an eye out for the following long-term potentialities:
- Long-term structural (economic, social, political) trends that have strong potential to transform global economies.
- Sectors and areas of high innovation with the potential to disrupt industries and the economy as a whole.
- Clear and significant growth potential.
- Trends that are increasingly important drivers of earnings for companies and individual investors.
Nour Private Wealth (NPW) Wealth Advisors have the thematic investment expertise to build profitable portfolios based on the identification of winning Megatrends. For more information on Thematic Investing, Megatrends, or any questions regarding the protection and expansion of your wealth, contact us at 1.855.545.9090 or by clicking the following link: https://www.npw.ca/contact-us/.