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Investing in powerful long-term themes

17/09/2020

The world is undergoing significant change, but it often takes dramatic events like the new coronavirus pandemic to highlight the extent to which society and the economy have evolved.

For example, the role of digital infrastructure in our lives has grown rapidly over the past decade. Yet its critical importance has become very apparent recently, as hundreds of millions of people have been confined to working and entertaining ourselves at home.

While we can understandably tend to focus on the short-term challenges we face as investors, there are powerful social and economic trends that present us with longer-term opportunities. These themes will play out not only over several years, but several decades.

How can we identify these global themes?

To consider how we might invest our money in a way that benefits from thematic tailwinds, we need to first consider the forces that are shaping profound and lasting changes in the world.

These include global macroeconomics, demographics, government policies and spending, as well as technological innovation, among other things.

By analysing these big issues, we can identify long-term trends – like the growing imperative to de-carbonise the global economy and the fact that more people are living longer and healthier lives – that we can tap into.

Importantly, these are themes that are grounded in reality and that can stand the test of time. They are not far-fetched ideas that hinge on undeveloped science or fads that may fall out of fashion. Critically, they are also global, meaning the size of long-term investment opportunities can be enormous.

How can we invest in these opportunities?

Identifying structural themes is the first step for investors. The second step is to identify those companies that can stand to prosper -- to the benefit of all stakeholders, including their employees, shareholders and broader society.

Companies must be able to capitalise on one of these long-term themes through having the right expertise and products or, in some cases, solutions to global challenges. They must also be well run, with leadership that can execute a strategy to make the most of the opportunity.

It is important to be selective in the companies we invest in. To give the best chance of long-term gains, a company’s shares need to be fairly priced. We should be careful not to overpay for prospective future returns that cannot be guaranteed.

We also don’t want to overly rely on any one company or theme for investment success. Fortunately, beneficiaries of structural growth can be found across a broad range of sectors, enabling us to create a diversified portfolio of different types of business from around the world.

In an environment of uncertainty, we believe thematic investing has the potential to provide investors with an avenue for reliable and sustainable long-term capital growth and income. By focusing on global themes, we think there are opportunities to invest in tomorrow’s potential winners today.

The M&G Global Themes Fund looks to invest in the shares of companies that can take advantage of themes arising from changes within economies, industries and societies. The fund aims to provide a combination of capital growth and income to deliver a return that is higher than that of the global stockmarket over any five-year period.

The value and income from the fund’s assets will go down as well as up. This will cause the value of your investment to fall as well as rise. There is no guarantee that the fund will achieve its objective and you may get back less than you originally invested.


The value of the fund's assets will go down as well as up. This will cause the value of your investment to fall as well as rise and you may get back less than you originally invested.
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