Despite being fast-moving and quite unpredictable, changes in consumption patterns are expected to reshape the economic landscape.
Key points
- Secular trends encompass thematic opportunities with the potential to have a material effect on the world and financial landscapes with long-term and lasting consequences.
- Consumption patterns, together with climate change, demographics and disruptive innovation, are UBP’s four secular trends.
- At UBP, we have identified four major underlying themes associated with the consumption patterns trend: global consumerism; generational consumerism; digital consumerism; conscious consumerism.
- We believe that investing in the underlying themes with highly skilled, active managers is the best way to gain exposure to this trend and capture growth opportunities.
Why thematic investing?
Traditional approaches to investing are constantly challenged by leading companies which, by nature, are innovative and, for most of them, multisectoral. Disruptors can be found in any sector or industry, making the traditional industry classification framework less and less relevant. Disruption is blurring the lines between countries, sectors, and industries. Therefore, looking at the world through a thematic lens allows investment professionals to access the whole spectrum of opportunities.
Along with climate change, demographics and disruptive innovation, the evolution of consumer spending patterns is one of four trends impacting the global economy and transforming old habits. At UBP, we believe these trends will capture the key shifts affecting global businesses and society over the coming decades, and therefore offer an exciting starting point to identify long-term investment opportunities. However, these four long-term trends are affecting not just the planet, but also the financial markets and those who participate in them. That said, they are often too large and move too quickly for investors to grasp. As traditional classifications become obsolete, many portfolio managers are throwing off the shackles of traditional, sector-driven and passive investments, and instead adopting theme-based solutions. But how can a themed approach deliver superior investment returns by viewing the future in the light of the erratic consumption patterns trend?
Changing patterns: adapt or die
Demographic and technological developments have precipitated the evolution of the traditional consumer model and reshaped consumption patterns. By consumption we are not just talking about purchasing products but also the consumption of, for example, technologies, services and experiences. In order to grasp how consumption patterns are evolving, it is crucial to understand what is driving the shifts in those patterns, both today and in the future. In some instances the drivers of change are structural and in others more cyclical; some have been evolving for decades and others are relatively nascent.
Thanks again in part to technological developments, change such as this happens faster today than ever before, making it crucial for all those reliant on the consumer to stay relevant. This also presents numerous opportunities for forward thinking and for nimble market participants to exploit.
Cédric Le Berre
Senior Analyst
Cédric Blanc
Portfolio Manager
