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Lets Focus Hero

Let’s focus on what’s ahead

The world has been through a period of significant change over the past couple of years, as people have had to adapt to new ways of living and working. Here, we discuss some of the changes we expect to see over the next decade and detail how we’re adapting to them.

One hundred years ago, the Roaring Twenties were about to begin. As the recovery from World War I turned into an economic boom, technological development and social liberty started to modernise almost everything about life – from films to fashion to finance.

In the Twenties, the spread of phones and movies transformed communications forever. Cars and planes came into widespread use, creating the tourism and oil industries. The 1920s also ushered in a century of US cultural, political and economic dominance. Many investors who identified some of these trends early on became very wealthy – and appear on billionaire lists even today.

So what forces could change the world now? What trends should we be looking out for?

Making the world bigger and smaller

At the beginning of the 1920s, it took nearly ten days to get from London to New York by boat. It now takes just six hours by plane – and is far more comfortable

Travel in the next decade could get wilder than we have imagined. Could space tourism be the next big thing? Elon Musk is already talking about a colony on Mars by the end of the next decade which would bring enormous challenges, and plenty of opportunities too.

Of course, as our horizons are expanding into space, the world is also getting much smaller – thanks to the technology in our hands. We shop and we Skype. We Tweet views to everyone, group chat with a select few, and private message the truly special. Perhaps the least used function of a mobile phone is old fashioned voice calling …

In the future technology will become even more embedded in our lives. It may not seem that we can get more connected than currently, but Google, Facebook, Netflix will most likely prove us wrong. Betting against innovation has not been sensible historically – but it can be difficult to work out exactly who the winners from tech will be.

Lets Focus Break 1

"A more confrontational geopolitical environment is likely to make financial assets more volatile."

We suspect the ‘winners’ of the next cycle will be different from the last and have adjusted our funds accordingly, to allow you to benefit from an everchanging landscape.

7IM Fund range

A world where the US is not number one

The Empire State Building was designed in the late 1920’s. Once completed, it remained the tallest building in the world until 1970. Skyscrapers became synonymous with wealth and power – and the United States led the way for a long time. Now, Asia dominates.

This highlights the ongoing shift of global economic and political power to East Asia. China will exert increasing influence on the global stage as it flexes its muscles internationally. Coming to terms with the new, huge kid on the block could be tricky for the ‘old’ powers: the USA and Europe. A more confrontational geopolitical environment is likely to make financial assets more volatile.

Meanwhile 1.4 billion Chinese consumers want more things to spend their money on. Developed market brands used to dominate the middle-class Chinese market. But over the last decade this has been changing. Businesses that can tap into this pent-up consumer demand will be rewarded.

Billions, old and new

As medicine and public health have improved worldwide, people are living for longer. In the US in the 1920s, only one person in twenty-five was older than 65. Today this figure is close to one in seven. A similar trend is happening across the globe.

Of course, babies will still be born, most of them outside the developed world. The UN forecasts that India will become the most populous country on earth just as the 2020s end; home to over 1.5 billion people. The global population will grow by about 11% in the next ten years. That’s 1.2 billion extra humans – most of them in Southern Asia and sub-Saharan Africa.

As these changes happen, many Western economies will struggle to fund the retirement for large swathes of their populations. With more and more retired people relying on savings for support, there will be new and unexpected flows of money in the financial system – which may upend the current status quo.

Some East Asian nations will have to deal with aging, as well as trying to create new jobs and industries for the younger generation. Could sub-Saharan Africa end up being an economic growth winner?

Lets Focus Break 2

"The answer isn’t as straightforward as it seems."

Each individual’s needs are different, which is why we provide a wide range of varied model portfolios, so that each client can find one suitable for them.

7IM Model Portfolio Service

The climate changes everything

The world is heating up, and will keep getting hotter for a while to come. Businesses across the world are responding already. Some companies are addressing small problems that might become big, whilst others are trying to solve small parts of a big problem.

As the world begins to move away from fossil fuels, coal, oil and natural gas companies will have to adapt. Do investors really want to own companies whose assets amount to large holes in the ground? The answer isn’t as straightforward as it seems.

Mining sounds like an obvious sector to avoid, but it all depends on what’s being extracted. Coal might be on the way out, but lithium and cobalt are vital components of batteries in electric vehicles … for now.

Oil companies might struggle as demand declines. But the people who run BP and Shell aren’t asleep. Large energy companies are the biggest investors into sustainable energy technology, as they try to stay relevant (and profitable).

Lets Focus Break 3

"We believe in true diversification, across asset classes, sectors, regions and currencies."

Diversity is key when it comes to investing, and the topic of sustainability continues to gain significant momentum in the investment world, which is why we have launched a suite of responsible investment solutions.

Responsible investing with 7IM

Investing for uncertainty

How should one invest in this new world? It’s hard to say. How confident can you be in picking a winning company, or theme, or region? Rather than trying to bet one way or another, we believe in investing broadly across as many different assets, regions and companies as possible.

That way, irrespective of what’s ahead, you can be confident that you participate in areas that will do well. Yes, you may end up in some areas that may not do so well but you can be reasonably sure of capturing the big picture trends that will shape the next decade.

And that’s exactly what we do here at 7IM. We believe in true diversification, across asset classes, sectors, regions and currencies. Not just following today’s winners, but uncovering the themes and winners of tomorrow, to be truly prepared for the future, whatever it may look like.

See how we have implemented our thinking across our product range below.

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