Spotlight on long-term trends – UBS
From brain implants to asteroid defense, in this quarter's Spotlight, the UBS Chief Investment Office (CIO) discusses three thematic moonshots versus our take on reality, and provide an update on our global equity focus lists.
The difficult environment for growth and tech stocks has not waned, but for long-term investors, the secular trends this theme is targeting should continue to play out over the coming years. (ddp)
In the hot summer heat, investors caught a glimpse of a recovery in high growth stocks, but late September proved this to be a short-lived mirage. High inflation has persisted globally, and central banks including the Federal Reserve are continuing to hike interest rates in response. In the midst of all the market volatility, many investors might have missed some significant milestones and technological achievements related to our themes in focus. These “moonshot” developments highlight the ongoing progress made and the potential inherent in secular long-term themes, but for investors, moonshots don’t tell the entire story.
As the difficult market environment continues, some investors may be concerned that thematic investments are too heavily tilted to high-growth, high-beta equities. These factors do describe many thematic companies, but investors don’t need to wager on who will create the next moonshot in order to gain thematic exposure. Thematic companies vary widely, even within one theme. In volatile markets, investors should focus on the most defensive pockets of each theme, in addition to diversification across themes. For investors with sufficient time horizons and appropriate appetite for risk, early-stage opportunities closer to the realm of “moonshot” technologies could be accessed through private or venture funds. In this quarter’s Spotlight on Long-term Trends, we highlight three thematic moonshots and provide our take on how to position for these secular themes in light of the economic reality.
Implications for highlighted global themes
In the full report, we highlight the themes of water, gene editing and brain implants, and NASA’s first-ever successful planetary defense test and provides a brief update on how the current environment impacts the outlook for certain long-term themes and related global equity focus lists.
Read the full report Spotlight on long-term trends 4 October 2022.
Main contributors: Michelle Laliberte, Eric Potoker, and Nathaniel Gabriel
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