Three vital themes for investing over the next decade

By: Fabiana Fedeli, Chief Investment Officer Equities and Multi Asset, M&G Investments (UK)

As long-term investors, there are three important themes that can’t be ignored as, over the next 10 years, companies able to operate profitably in these areas are most likely to still have a successful future. These are the environment, infrastructure, and innovation. And we’ve found some fascinating companies operating in each, both listed and unlisted.

The environment

The greatest threat we face in the next decade is to the environment. We invest in companies who are dedicated to staving off this threat.

  • Climeworks’ (private company in Switzerland) technology, called ‘direct air capture’, permanently removes carbon dioxide from the air and stores it underground where, through a natural process, it transforms into stone, and will remain there for over 10,000 years.
  • Torma (listed in Norway) makes reverse vending machines where you can deposit your used plastic bottles and receive a voucher for new groceries in exchange.
  • Plastic Energy (private company in Switzerland) has found a way to recycle any plastic waste through a specialised chemical process, not just waste that is recyclable by traditional mechanical means.

Infrastructure

Globally the infrastructure gap is US$15 trillion. Of course, this provides an enormous investment opportunity.

  • AES Corporation (listed on the NYSE) is an electricity utility playing an important role in the energy transition. It is among the top developers selling clean energy such as green hydrogen to corporations. 
  • Sun King (private company) is the largest off-grid solar energy provider in the world. It develops products aimed at people living without reliable access to energy, creating modular panels that can be bought individually on a pay-as-you-go basis. The technology is scalable, relatively cheap, and important particularly for regions like Africa where some 600 million people have no stable power connection.

Innovation

We’ve labelled our third theme “innovation” as it reflects our search for companies whose primary drive is to innovate in their areas of expertise.

  • London-listed Oxford Nanopore Technologies has developed a portable genome sequencing machine that, because of its low equipment cost (approximately US$1,600), enables much broader access to sequencing technology, with the goal of opening up new applications that can have a profound, positive impact on society.
  • Peptidream (listed in Japan) uses peptides — tiny components of amino acids — to improve drug availability: that is, getting a drug to the right cells in the body. In the field of cancer, for example, it has the potential to make drugs like siRNA therapies available body-wide, not just in liver cells.

Finally, there is the field of artificial intelligence (AI), which has massive application. Already, it’s being used in healthcare, financial services, education, e-commerce, home automation, car manufacturing and semiconductors, and the list will go on. Our investors have already benefited from our highly specialised AI team, solely focused on understanding the implications of AI and how to invest in it.

In conclusion, investing in the next 10 years won’t be anything like investing over the past 10 years.  Investment firms across the world will constantly be faced with exponential, unparalleled change and will have to rise to the challenges that will ensue.

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