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The importance of megatrend investing

June 2021

Want to know about megatrend investing?

Megatrends are powerful structural forces of change that carry significant investment implications.

Megatrends are not concepts that should be confined to academic journals – they are powerful structural forces of change that carry significant investment implications.

It was back in the 1990s when Pictet Asset Management first recognised the importance of these pervasive secular trends and how they could be harnessed by investing along thematic lines. When we launched the Pictet Biotech strategy in 1995, it was one of the first funds to invest exclusively in biotech stocks. This was followed five years later by the launch of the Pictet Water strategy, which was one of very first environmental thematic strategies few funds of its kind.

At that time, such strategies were viewed as niche investments, suitable for a narrow band of investors.  Today, the thematic approach has been embraced by numerous institutional  investors worldwide. The evolution of these strategies into mainstream investments is testament to their enduring long-term performance.

But thematic investing is also a strategy for the future. Since the beginning of the global financial crisis, the rise in the correlation between regional equity markets has diminished the benefits of cross-regional diversification. By adopting a global, thematic approach that both ignores the constraints of benchmarks and seeks to capitalise on the secular trends shaping our world, investors can diversify the sources of risk and return within their portfolios.

In an investment environment that promises to be unpredictable, this is something investors should value.