Investing in a changing world

Hobbs argues that many of the wider investment opportunities over the next decade and beyond will be fuelled by important productivity gains resulting from higher education levels, the convergence of technological breakthroughs plus a healthier global population translating into greater economic growth. 

But as investors begin to take stock of the rapid changes, many remain unsure how to plan their investments over the coming years to tap into the most compelling trends produced by this fourth industrial revolution. 

With much of the stock market gains over the past decade coming from US technology companies, many investors have concentrated their portfolios into the likes of Facebook, Amazon, Apple, Netflix and Google’s Alphabet, which have outperformed the market. Indeed, in the five years to February 2020, just before the crisis, these so-called FAANG stocks gained 292 per cent – vastly outpacing the S&P 500’s 62 per cent. 

But Robert Smith, Head of Behavioural Finance at Barclays Wealth Management, says that companies’ past performance can create strong convictions among investors – a fact that means they risk losing out on wider and deeper opportunities. “You find that people can become attached to very specific themes, ideas and technologies rather than taking a step back and realising that the nature of future growth may be broader.” 

Alan Budenberg, Investment Consultant at Barclays Wealth Management, says that tapping into the most compelling investments of the coming years involves at least two guiding principles. The first is to stay invested over the long term to avoid becoming dependent on cycles and to ensure exposure to the next innovative breakthrough – whenever and wherever that takes place.

“Investors often focus on what is going to happen over the next few months,” he says