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July 2020 / INVESTMENT INSIGHTS

What Will the World Look Like In a Year?

Coronavirus has dramatically changed the way we live our lives in a very short space of time. But how long can this go on?

After experiencing such all-encompassing change in our lives – and indeed, the very way in which the world functions – one question many have been pondering is: where will be in a year’s time?

Will it be very similar to what we have now, if a vaccine is not forthcoming? Are we likely to still be in a world of seemingly endless videocalls and virtual meeting rooms? And what does that mean for markets and our investments?

We believe the short answer is that things are likely to look better – albeit subtly changed. In our view, it’s unlikely the world has entered a new paradigm where we do not travel and meet others, even though this will definitely be subdued over the next six months.

What will drive improvement?

For some time now we have maintained that structural change defines our world – and this continues to be the case. If anything, the origin of the current economic crisis may accelerate some of the forces that have been defining our world.

These include:

  • More fiscal and monetary stimulus: We have seen swift and significant action from governments and central banks around the world as leaders tried – as much as their tools allow them – to cushion the blow to economies and employees
  • Greater use of technology: Global lockdown measures that have contained us to our homes have made us rely on technology to a much greater extent than before
  • (Still) not enough growth to correct rising wealth imbalances: Economies around the world have suffered major setbacks, and only served to deepen existing inequality, focusing attention on introducing measures to improve growth

What does this mean for investments?

Given these factors, it is almost inevitable that we will continue to see a dispersion in stock returns, as the differences between those businesses on the right side of change and those being disrupted become more glaring. This presents opportunity, but risks are likely to evolve as well, as we move through the recovery and into 2021. And not to forget: the consequences of the recent fiscal stimulus will also present further risks over the longer term.

Risk and crisis management have been crucial in the midst of recent market events. However, one of the best defensive elements for investors in today’s environment is an imagination about future change.

We have been working hard to balance our risk management with a perspective on how our world is being reshaped by, essentially, a global natural disaster. The only way we know to do this is through deep analysis on those stocks that may – or not – find themselves on the right side of change, when we emerge from the economic and social restrictions that define our lives at the moment.

When change is everywhere, it is critical to think long term and avoid getting stuck in the near-term news flow. We hope and expect positive change to come from this incredibly challenging period – and this change will cut across society, economics and corporate activity.

 

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ESG Integration in Action
202007-1234488
RELATED FUND
SICAV
Class I USD
ISIN LU0143563046
A high conviction global equity fund for which we seek to identify companies on the right side of change. The portfolio typically consists of typically 60-80 stocks representing our most compelling bottom-up growth ideas, often derived from technological innovation and secular disruption.
View More...
3YR Return
(Annualised)
24.36%
Fund Size
(USD)
$4.1b

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