Fri, 14/06/2019 - 10:15
iShares has launched a megatrend investing framework, including a new suite of exchange traded funds (ETFs) designed to capture the structural shifts influencing the future of the global economy and society.
BlackRock’s research, portfolio management, and Investment Institute teams – informed by work with corporations, thought leaders and global organisations – have identified five megatrends. These forces provide a new investment framework that goes beyond traditional sector, market cap and geographic classifications.
• Technological Breakthrough: Technology is driving exponential progress in the tech sector and far beyond
• Emerging Global Wealth: A newly affluent class of consumers will expand in Asia and across emerging markets
• Climate Change and Resource Scarcity: Demand for a clean, green tomorrow will advance energy and conservation
• Demographics and Social Change: Longer lifespans and modern lifestyles will change medicine and consumer habits
• Rapid Urbanisation: Mass migration to cities will require new business models and infrastructure
iShares megatrend ETFs are unconstrained index equity ETFs that seek to track indexes developed by leading industry index providers. The global indexes target stocks with high return potential across relevant industry value chains. For example, investment opportunities for autonomous vehicles would include not just car-makers but also hardware companies making road sensors and navigation cameras, and battery manufacturers.
Armando Senra, Head of US, Canada and Latin America iShares, says: “The iShares megatrend ETF suite seeks to capture the most powerful investment trends driving the global economy today, and that we expect to play out for decades to come. The ability for anyone to access these targeted growth opportunities through an ETF represents the next frontier of efficiency, transparency and the democratisation of investing.”
iShares is also launching two new products – the iShares Cybersecurity and Tech ETF (IHAK) and iShares Genomics Immunology and Healthcare ETF (IDNA). IHAK provides investors access to companies around the world that are helping fight the rise in cyber crime by using cybersecurity solutions across hardware and software. The other, IDNA, seeks exposure to companies worldwide at the forefront of medical revolutions in the rapidly expanding fields of molecular biology and mapping of genomes, and immunology.
Chad Slawner, Head of US iShares Product and Strategy, says: “This framework is the culmination of years spent analyzing and observing broad structural changes shaping the world around us. We took the best thinking from across our firm, including active investment teams, to create our megatrends. Our mission is to provide efficient ways to access these forces to improve long-term outcomes for clients.
Megatrends ETFs can serve a number of roles in a portfolio, including as alternatives for, or alongside, investment approaches that seek above-benchmark performance over time. As the identified megatrends are pervasive across industries and tend to be forward-looking, they naturally resonate with investors and advisors seeking to capture future alpha.
“For most people, trends like urbanisation and technological breakthroughs are intuitive growth stories with real impact on their own lives,” says Armando Senra. “That’s the essence of megatrends ETFs, providing investors with the shortest path possible to innovation that is shaping the future.”
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