Cordusio – UniCredit’s wealth management boutique – shares insights on the trends helping to shape investment strategies for the year ahead.
These seven long-trends must each be taken into consideration to construct adequate investment strategies, according to the researchers at Cordusio Strategic Wealth Management. Let's explore them together.
1 – Long-term negative yields
The optimal level of inflation of 2 per cent is a long way off. The main factors reinforcing this trend are demographic variables (aging of population), technological revolution, globalisation and relocation policies, falling commodity prices and quantitative easing policies. This means generating positive yield requires us to consider investments in asset classes that are riskier than pure government bonds.
2 - Chinese growth
Financial markets continue to be influenced by China's growth while the internationalisation of the Chinese currency could transform the Renmimbi into a reserve currency, increasing the attractiveness for RMB-denominated bonds and equities.
3 - Digital revolution
The Internet of Things, artificial intelligence, robotics, 3D printing, self-driving vehicles and the Internet of Behavior are some of the aspects of a digital revolution that is now unstoppable. Identifying the segments and companies that are best positioned in the transition from the contact economy to the remote economy, allows to invest in the leaders of the future.
4 - Countering climate change
Worsening climate conditions could have a massive impact on economic activities so, within the ESG themes, the "Environment" factor is becoming more and more important. Portfolios need to reflect a specific selection criteria that takes in consideration the ESG impact of the Companies.
5 - Fighting inequality
The World Economic Forum estimates that it will take 100 years to achieve full wage equality between men and women, while 260 million children of school age do not have access to education, according to UNESCO. Investing in companies and countries that attempt reduce inequality means investing in those who have a greater chance of creating economic and social value.
6 – From weakness to wellness
The Coronavirus pandemic has exposed the weaknesses of health systems around the world and widened the differences between developed and developing countries. With healthcare spending growing by more than 10 per cent relative to GDP, there will also need to be a collective shift in perspective from a focus on treatment to a focus on prevention. Investing in healthcare will be important to coping with both aging populations and the prevention of new infectious diseases.
7 – Infrastructure
Investing in infrastructure can have a desirable multiplier effect on growth. New "Infrastructure 2.0" plans that take advantage of low interest rates can create millions of jobs and generate a positive economic impact on the growth of the economy.