Investcorp’s second Global Mega Trends Survey finds Digitalisation, ageing population and climate change as top of mind for institutional investors
Investcorp, a provider and manager of alternative investment products, in partnership with Mercury Capital Advisors, an institutional capital raising and investment advisory enterprise, IMD Business School and Banque Pâris Bertrand, an independent, Swiss-regulated private bank based in Geneva and Luxembourg, have announced the results of the second iteration of the annual survey, “What’s Next? Investment Trends for the Future.”
The poll explores institutional investors’ sentiment and allocations regarding the most pressing economic trends that are expected to shape the global economy over the next three decades.
Some 95 per cent of institutional investors and family offices identified Automation, Digitalisation and Artificial Intelligence (AI) as the top trend they believe will shape the global economy over the coming decades. Ageing Population (69 per cent) and Climate Change (65 per cent) were listed by investors as the second and third highest-ranked trends, respectively.
“Institutional investors’ view of the major trends that are to shape the global economic landscape over the next three decades can give us significant insight into where capital is likely to flow in both the near- and long-term,” said Rishi Kapoor, Investcorp’s Co-Chief Executive Officer. “In this year’s survey, we see Digitalisation and AI as an area ripe for investment. An Ageing global population and ongoing concerns with climate change also provide ample opportunities for these investors to capture the economic upside associated with these mega trends either through direct investment or, more commonly, by allocating to external managers.”
Rounding out the top ten trends are, in order:
Automation, Digitalisation and AI (95 per cent)
Ageing Population (69 per cent)
Impact of Climate Change (65 per cent)
Electric Vehicles and Autonomous Driving (62 per cent)
Personalized Healthcare (60 per cent)
Growing Dominance of China (59 per cent)
Digital and Cryptocurrencies (59 per cent)
Urbanization and Smart Cities (38 per cent)
Sustainability and the Circular Economy (37 per cent)
Redefining Global Trade (26 per cent)
New to the list this year were the emerging Dominance of China and Digital and Cryptocurrencies, demonstrating that a significant portion of respondents see them not as short-term trends, but those that are here to stay and deserving of significant attention and capital allocation.
The top results also showed interesting findings within the data.
Automation, Digitalisation and AI: Nearly 95 per cent of investors polled cited that Automation, Digitalisation and AI as the top trend that will shape the global economic landscape and were more likely to invest in this trend via a combination of both public and private markets (53 per cent). The majority of investors feel that the significance of automation, Digitalisation and AI will be especially felt over the next two decades, with meaningful progress in key industry segments to occur seven years from now.
Ageing Population: Two thirds of investors expect the Ageing population trend to maintain its importance until at least 2050, indicative perhaps of both the large senior living welfare funding gap that exists today and the equally attractive investment opportunity that it presents over the long term. Investors feel that healthcare and retirement services present the greatest opportunity and expect meaningful investment opportunities to arise ten years from now.
Impact of Climate Change: Climate change was ranked as the third most significant trend. Notably, almost all investors expect climate change to significantly shape the global economy over the next two decades; which is consistent with global developments in addressing climate change risks and opportunities. Participants were more likely to invest in the impact of climate change through both public and private markets (63 per cent), as opposed to favoring one over the other. Approximately half of all investors expect meaningful developments across several industry segments this decades. Over the short term, investors expect the greatest opportunities to be within the renewable energy and clean technology segments.
External Managers vs Direct Investing: Investors continue to prefer allocating funds to external managers over direct investing; this also holds true regardless of whether the investment strategy is exclusively private, exclusively public, or mixed in approach.
Private Markets vs Public Securities: Institutional investors were either tilted towards private or public markets; not surprisingly, private markets-tilted investors had the highest expectations in terms of future overall target returns, exceeding public market expectations by 400bps.