Invest in these super-trends that will change our lives for decades

Author

Ed Monk Investment Editor

October 14, 2015

Robots to keep us company in old age, sharing our possessions with strangers and micro-chipped cows will all help us in the future

What will the world look like or 30 years? Or 40? Or 50?

If history has taught us anything, it’s that trying predictions often stand to be made to look foolish.

For the first 20 or so years of its life, Apple was a home computing also-ran. Then came the original iPhone, ushering in entire new sectors of industry and catapulting Apple to become the biggest by public company in the world.

GPS has largely done away with the need for maps, while most of the world’s population can be contacted at any time with using a mobile phone – things that would have seemed impossibly futuristic only decades ago.

Yet despite the seeming futility of predicting the future, that’s what leading investors are constantly seeking to do.

Correctly calling movements in, say, economic growth in the short term can give an advantage. But spotting early the great “super trends” that will shape how we all live our lives, however, can make fortunes.

Underlying these trends are very long-term changes in the the world’s population. In particular, the upward shift in average ages. The United Nations has predicted that the number of people in the world over 65 years old will outnumber the number of children by 2047 for the first time ever.

Many of the inventions and concepts are not yet fully developed and returns are unlikely to be immediate. But over the long-term their significance will grow and grow

This will create huge markets for the companies serving the ageing population, but also hastens the need for greater productivity and efficiency, as the number of economically active people dwindles.

Many of the great developments predicted to shape our lives are interconnected – the rise in one is dependent on the success of another and technological breakthroughs will take advantage of more than one.

Here we examine some of the trends enthusing the most far-sighted investors. Many of the inventions and concepts are not yet fully developed and returns are unlikely to be immediate. But over the long-term their significance will grow and grow.

Accessing the profits they promise is not easy for ordinary people, partly because the companies making the breakthroughs can often do it without the need for money that is traditionally raised by listing on stocks exchanges.

When they do go public, their potential is already established and they are already very highly valued, as happened with Facebook.In other cases, they will be snapped up from private ownership by giants like Google, Amazon, Facebook or Alibaba.

Nonetheless, we’ll try to provide a few ways for ordinary investors to tap into the super trends.

Robots

Machines to help us perform everyday tasks have been a feature of fiction for more than a hundred years, but their practical use in the real world has failed to live up to the script.

Now, though, there is a genuine belief that serious breakthroughs are happening.

Jim Mellon, a renowned British investor, has studied the global market for robotics. In his book Fast Forward: The technologies & Companies Shaping our Future, co-written with Al Chalabi, he explains: “Robots are no longer confined to assembly lines, factories and foundries and they are now programed to be less timid in the company of humans.”

Robots are no longer confined to assembly lines, factories and foundries

“The science of ‘haptics’, or touch sensitivity, is rapidly being introduced to robots, making them much more sensitive to their environments.”

Existing primitive versions include The Roomba, a small vacuum cleaner that moves around the house on its own, returning to its station to charge when it’s finished.

Next will be domestic helper robots, particularly to meet the needs of older people, and this is already hapening in Japan where the problems of an ageing population are already acute. Mr Mellon predicts robots will come to perfomr the role of companion, as well as servant, to help stave of loneliness among the elderly.

The real quantum leap is expected in the area of artificial intelligence. Already a machine has passed a version of the Turing test, named after the famous British mathematician Alan Turing and requiring a machine fool 30pc of humans that they are interacting with a real person.

In 2014, 33pc of judges on a panel believed the machine they were chatting with online was a 13-year-old boy from Odessa, Ukraine.

Google has made great strides into the world of robotics, establishing a dedicated division and buying nine robotics companies. Its driverless cars are now workable and have been predicted to revolutionise travel by making road systems potentially far more efficien, greatly reducing the space needed for parking, for instance.

Amazon has introduced robots to its giant picking warehouses and is developing unmanned drones to make deliveries.

Getting access to the potential of robots has been made easier with the launch of a small number of funds dedicated to the sector. The Pictet Robotics fund is one.

Investing directly in Google is another way to get exposure. Mr Mellon said he regarded Google as a great investment, despite its already great size.

Life extension

As populations age, the hunt for treatments and cures for illnesses related to old age will intensify.

The hoped-for shift is from medicine that prolongs life to medicine that enables longer active life and it is predicted that working until 80 will become common in the developed world.

A huge leap forward was made when the human genome was fully sequenced 15 years ago, although it has taken the years since then for the rewards to start to be felt.

Companies that enable analysts and technicians to read and understand genetic information more quickly, insightfully and at lower cost are now in hot demand.

Companies that enable analysts and technicians to read and understand genetic information more quickly, insightfully and at lower cost are now in hot demand.

Three of these – Oxford Nanopore, Horizon Discovery and Genomics Ltd – are held by Woodford Investment Management in the Patient Capital trust, managed by Neil Woodford.

Saku Saha, an anaylist for the trust, said: “It has taken a long time to fully understand and harness the potential of genomics, personalised medicine and the greater insights that scientific breakthroughs give into the nature of disease. But the pharma industry is now starting to do so with profound and positive implications for investors and patients alike.”

Much of the cutting edge work in bio-technology is conducted in the US. The sector is regarded as over-priced by many experts but access can be made through dedicated funds. Axa Framington Bio-Tech has been the strongest performing unit trust.

The internet of things

This is a concept that draws upon latest development in the internet, as well as increased sophistication of machines, including robots.

It is the sharing of electronic information between things in the real world to improve efficiency and productivity. Existing examples include the app-based taxi service Uber, which allows users to order, pay for and track taxis with their smartphone, and coffee machines in chains that automatically order raw ingredients as they are needed.

A Dutch firm recently developed a chip that can be implanted into cows which tells the farmer information about the animals weight and health

A Dutch firm recently developed a chip that can be implanted into cows which tells the farmer information about the animals weight and health, while a pacemaker now exists for human heart patients can transmit information to doctors to aid early treatment.

One of the most exciting developments has been 3D printing, which stands to make much of the commercial shipping and transportation work done in today’s world redundant because production can occur close to demand.

Microchip companies, such as UK-based Armstand to benefit from the expansion of the internet of things, while Google is also a major player.

The sharing economy

In the search for efficiency and productivity, the rise of the sharing economy is seen as key. Simply, we do not need many of the items we now have because it should be possible to borrow them from someone else when they do not need them.

Versions already exist, such as the car share service Zip Car, but the concept is tipped to expand, helped along by the expansion of the internet of things that means information about the availability of items is instantly available.

Peer-to-peer lending, where private borrowers and lenders are matched up, is part of the sharing economy as is rapidly expanding. An investment trust was recently launched that invest in the peer-to-peer platforms that conduct lending.

 

This article was written by Ed Monk Investment Editor from The Daily Telegraph and was legally licensed through the NewsCred publisher network.


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