From mega trends to investment themes
Everyone loves a good story. While most asset managers have historically centred their investments around specific asset classes or geographic regions, more investors today are looking for a greater emotional attachment with their portfolios. Thematic strategies that reflect a compelling narrative can help meet this demand and offer an attractive opportunity for active asset managers to show what they can deliver.
Why thematic investing?
Transparency
Themes are well-known, starting as topics of conversation among budget decision makers within companies and will later become visible in most people’s personal experience
Growth
Powerful and secular shifts; triggered by innovation, regulation, socioeconomic factors; identify winning themes impacted by these shifts and allow investors to participate in them, no country or sector boundaries
Performance
Selection of valid themes with good timing allows for higher alpha potential
Megatrends
Urbanisation, Technological Innovation, Resource Scarcity, and Demographic & Social Change
From urbanisation to smart cities
Population living in cities1-2
An increasing trend from
An increasing trend from
0%
1800
0%
1950
0%
2018
0%
2050
0.0
Million people
are moving into cities per week3
0
Mega
cities
cities
had over 10 million
people each in 20154
people each in 20154
By 2030, the number of
mega cities is
expected to reach
mega cities is
expected to reach
0
4
Cities are working smarter5
Driven by sensors, networks and engagement
Smart
lighting
lighting
Intelligent and weather adaptive street lights boost energy efficiency
Smart
building
building
Rooftop gardens to help with insulation, optimising utilities usage and ventilation
Smart
transportation
transportation
Monitor vehicle and pedestrian levels to optimise traffic; autonomous vehicles
Smart cities: Growth story for investors
Economy
Cities are generating
Cities are
generating
generating
0
%
of global GDP 6
Financial
IoT in smart cities market worth
$
0.0
Billion USD
by 20237
Civic and
environmental
environmental
Cities that run on information can reduce greenhouse gas emission by
0
-
0
%
within 20 years8
From technological innovation to cybersecurity
IoT
In the Internet of Things (IoT) age, over 20.4 billion devices will be connected by 20209.
Unlock opportunities
The explosion of connectivity unlocks countless opportunities for cybercrime.
Cybersecurity industry
The cybersecurity industry is quickly evolving to keep up with the growing number of cyber threats,
creating a boom that investors can capitalise on.
IoT
In the Internet of Things (IoT) age, over 20.4 billion devices will be connected by 20209.
Unlock opportunities
The explosion of connectivity unlocks countless opportunities for cybercrime.
Cybersecurity industry
The cybersecurity industry is quickly evolving to keep up with the growing number of cyber threats, creating a boom that investors can capitalise on.
0
Million
6 million records lost/
stolen every day10
stolen every day10
0
Billion
Over 10 billion records
have been lost or stolen
globally since 201310
have been lost or stolen
globally since 201310
0
Billion
Nearly 3 billion of these
were breached
in the first half of
2017 alone10
were breached
in the first half of
2017 alone10
0
Thousand
Close to 300,000 records/
stolen every hour10
stolen every hour10
0
Million
6 million records lost/
stolen every day10
stolen every day10
0
Billion
Nearly 3 billion of these
were breached
in the first half of
2017 alone10
were breached
in the first half of
2017 alone10
0
Billion
Over 10 billion records
have been last or
stolen globally
since 201310
have been last or
stolen globally
since 201310
0
Thousand
Close to 300,000 records/
stolen every hour10
stolen every hour10
Tremendous financial impact from data breaches
$
0
Billion USD
Average losses after operating systems have been hacked can climb to $29 billion USD11.
$
0
Billion USD
A single large scale cyber-attack can trigger $53 billion USD in economic losses, comparable to damages caused by natural disasters11.
$
0
Trillion USD
By 2021, the cybercrime damages will cost $6 trillion USD every year globally12
Economic outlook
Businesses are more focused than ever on protecting their data from increasingly complex threats.
$1 trillion - Between 2017 and 2021, the predicted global spending on cybersecurity products and services will exceed $1 trillion USD13
3.5 million unfilled cybersecurity jobs will be generated by 202113
Cybersecurity companies are continually innovating to remain competitive, focusing on mobile security, cloud security, threat intelligence and security analytics
Businesses are more focused than ever on protecting their data from increasingly complex threats.
$1 trillion - Between 2017 and 2021, the predicted global spending on cybersecurity products and services will exceed $1 trillion USD13
3.5 million unfilled cybersecurity jobs will be generated by 202113
Cybersecurity companies are continually innovating to remain competitive, focusing on mobile security, cloud security, threat intelligence and security analytics
Cybersecurity: Significant potential for investors
$
0
Billion USD
Global cybersecurity market value is $120 billion USD in 201914
$
0
Billion USD
By 2024, the market value is expected to increase to $300 billion USD14
Why AllianzGI for thematic investing
AllianzGI offers a selection of strategies that invests in companies expected to benefit from change, innovation and disruption.
Broad
Investment
Solution
Investment
Solution
Currently managing ~USD 10 billion in thematic strategies, available in different vehicles and markets
Thematica
Artificial intelligence
Cybersecurity
Global biotech
Health sciences
Climate transition
AllianzGI
thematic
offering
thematic
offering
Natural resources
Global agricultural trends
Global water
Demographics
EM consumer
Pet economy
A well-chosen theme will perform
A well-chosen and well-timed theme with investment discipline and fundamentals will likely perform across cycle. Let’s look at Water for example.
Topics for shorter-term with active allocation
We have strong investment discipline to avoid the inevitable mean reversion, while topics follow a volatile development path.
Investment hype cycle
Be part of the story
Water
Food
security
security
Digital
life
life
Future
factory
factory
Smart
cities
cities
Water
Food
security
security
Future
factory
factory
Digital
life
life
Smart
cities
cities
Source:
- 1.
- United Nations; ”Urban Millennium”;2001
- 2.
- United Nations; ”World Urbanisation Prospects – The 2018 Revision”;2018
- 3.
- PwC; “A New Urban Agenda: Accommodating 2 billion new urban citizens”;2014
- 4.
- Allianz Risk Pulse; “The megacity state: The world’s biggest cities shaping our future”; 2015
- 5.
- HKSAR; “Hong Kong Smart City Blueprint”; 2017
- 6.
- Worldbank; “Urban Development”; 2019
- 7.
- Markets and Markets; “IoT in Smart Cities Market worth $219.6 billion by 2023”; 2018
- 8.
- Mckinsey & Company; “Smart Cities: Digital Solutions for a more livable future ”; 2018
- 9.
- Gartner; “Gartner Says 8.4 Billion Connected "Things" Will Be in Use in 2017, Up 31 Percent From 2016”; 2017
- 10.
- Gemalto; “Data Breach Statistics”; 2018
- 11.
- Lloyds; “Extreme cyber-attack could cost as much as Superstorm Sandy”; 2017
- 12.
- Herjavec Group; “The 2019 Official Annual Cybercrime Report”; 2019
- 13.
- Cisco and Cybersecurity Ventures; “2019 Cybersecurity Almanac: 100 Facts, Figures, Predictions and Statistics”; 2019
- 14.
- Security Sales & Integration; “Global Cybersecurity Market to Eclipse $300B by 2024”; 2019
- 15.
- Morningstar Direct; Mar 2019
