Making future trends investable
To cover this need, VP Bank has launched three new funds to enable investments in future trends. They bundle these trends into three areas: consumption, industry and infrastructure.
The VP Bank Fund Future Citizen* invests in companies that stand to benefit from changing trends in consumption, lifestyles and society.
The VP Bank Fund Future Industry* focuses on companies that will benefit from technological change in the industrial and service sectors. This change is coming from digital transformation, the circular economy, the future development of healthcare or the increasing trend towards security.
The VP Bank Future Infrastructure Fund* positions itself in companies that benefit from changes in the areas of environmental and climate protection, sustainable infrastructure, the future of energy supply and modern mobility.
Thematic investing stems from the idea that trends influence economic development. The economist Nikolai Kondratiev already described such long-term economic trends in the 1920s. These cycles can be illustrated, for example, by the development of the steam engine, railways and electrical engineering since 1800. With the more contemporary innovations in the petrochemistry and information technology, the pattern has been repeated.
Thematic investors look to the future and ask themselves which trends will be decisive in the future. Clearly, not every short-term trend prevails over time. It is crucial that one or more structural growth drivers are at work. We have identified four: demographics and social, technological and environmental change.
In order for us to consider a future trend suitable for investment, the following criteria must be met, in addition to being favoured by a specific growth driver:
- Uniqueness: The innovative change must be driven by high economic relevance and extend to more than just one specific branch of industry.
- Longevity: Mega-trends endure far beyond classic economic cycles and replace previous economic patterns. A new economic regime is emerging, and the social environment is also undergoing change as a result.
- Growth: Mega-trends are growth trends that have the potential for above-average revenue growth within existing economic trends while also offering sustained strong earnings growth.
- Market potential: It is important for investors that sufficient diversification can be created across the changing value chain, even within a mega trend.
Investments are made in shares of companies that benefit from identified trends in three areas: consumption, industry and infrastructure. Investors should be aware that these tend to be smaller and medium-sized companies, because they have the potential to be among tomorrow’s big winners. Theme investments are therefore an important part of a well-diversified equity portfolio.
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*These funds are not available to everyone. If you are interested, please get in touch with your VP Bank contact person or client advisor or write to us at email@example.com