2015/06/10

7 Transforming World themes for 2015

Investment Strategy
Thematic Investing | Global 25 November 2014


7 Transforming World themes for 2015This report highlights actionable research on seven investment themes for 2015: financial repression, robotics, cybersecurity, Internet of Things, solar, water and the longevity revolution.

The BofAML case for thematic investing
The annualized price return from global thematic investing in the past three years is 32%, versus a 15% return from global equities over the same period. Theme investing should continue to outperform in the brave, new, post-QE world. Position for lower expected returns from financial markets by concentrating portfolios in assets related to our long-term themes.

A Transforming World
Cyclical and secular trends continue to transform our world at a fast and meaningful pace. Such trends include the following: 50% of all government bonds in the world currently yield 1% or less; in the next 20 years 1 in 3 UK jobs will be replaced by computers or robots (Chart 1); there are an estimated 122,000 cyber-attacks per week; 47 countries are officially classified as water stressed; and over half of Europe’s population will be aged 50 or older within 10 years.

Were better when were connected
A framework that links investment themes is required in a Transforming World. BofA Merrill Lynch Global Research’s thematic framework is organized as follows: People – for the allocation of scarce human resources; Innovation – for the disruptive role of technology; Markets – for the allocation of scarce financial capital; Government – for the role of public policy; and finally, Earth – for the allocation of scarce natural resources.-