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Outlook 2020: How important are digitisation, demographics and millennials?

9 January 2020

As part of our Outlook 2020 series, we asked several managers for their views on some of the year’s anticipated ‘megatrends’ including technology and younger consumers.

John Seo: Co-Founder and Managing Principal, Fermat Capital Management LLC

Things that affect our society affect insurance. In terms of millennial trends, we are increasingly using social media to gather ground truth during catastrophes. As long as we know how to filter truth from disinformation, we find social media, specifically Twitter, to be indispensable in learning what is happening on the ground after a catastrophe.

Swetha Ramachandran: Investment Manager, Luxury Equities

Those things in conjunction are extremely critical to the sector. China currently drives two thirds of the luxury sector’s growth; millennials and Gen Zs drive 80% of its growth. Therefore it logically follows that the Chinese millennial consumer is extremely important to the sector overall. These consumers do not know a world in which online and offline were distinct. The boundaries are very blurred; that accelerates the speed and necessity of digitalisation in the luxury sector.

Christophe Eggmann: Investment Director, Healthcare Equities

We expect digitalisation to revolutionise the way care is allotted to the patients. Today, we are already using artificial intelligence and machine learning to help improve prevention and treatment selection, for example, by matching the genetic profile of a patient with available therapies. The other themes, like emerging markets and millennials, are less of a theme in healthcare.

Gianmarco Mondani: Investment Director, European Non-Directional Equity

Barriers to entry in many industries are coming down, precisely because of digitalisation. The banking industry is a clear example. The commission side is under pressure because of new digital platforms that facilitate processes such as FX transactions, which banks were charging heavily for. Traditional clothing retailers, too, have to cope with an environment that has completely changed compared to 10 years ago. On the positive side, many technology-orientated companies can capitalise on these opportunities. So there are great opportunities for long / short to differentiate between the winners and the losers.

Paul McNamara: Investment Director, Emerging Markets Fixed Income

What people call the ‘megatrend’ approaches are not a huge concern to us. It can be important, for example, to acknowledge that Russian demographics are showing great signs of ageing. But in terms of the investment horizon that we are allocated on, we are not going to see many changes. These themes are embedded into the structure of the economies that we focus on, but changes within those categories are not a major concern for us.

Important legal information
The information in this document is given for information purposes only and does not qualify as investment advice. Opinions and assessments contained in this document may change and reflect the point of view of GAM in the current economic environment. No liability shall be accepted for the accuracy and completeness of the information. Past performance is no indicator for the current or future development. The companies listed were selected from the universe of companies covered by the portfolio managers to assist the reader in better understanding the themes presented. The companies included are not necessarily held by any portfolio or represent any recommendations by the portfolio managers. The mentioned financial instruments are provided for illustrative purposes only and shall not be considered as a direct offering, investment recommendation or investment advice.