Global X ETFs Thematic Investing: Emerging Opportunities for Alpha-Seeking Investors Amid Stay at Home Economy
Jon Maier, Chief Investment Officer at Global X ETFs, said: Chinas importance on a global scale is growing.
COVID-19 - A fundamentally disruptive event of a generation
COVID-19 has triggered the most transformative macroeconomic event in recent history. To prevent the recession from developing into a lasting depression, global policymakers have launched an unprecedented array of fiscal and monetary measures. Additionally, investors face the rise of domestic social unrest and geopolitical tensions that generate economic uncertainties, while messages surrounding the US-China trade relationship are remaining mixed. US-China trade tensions are unlikely to dissipate altogether, even after the US elections later this year.
Jon Maier, Chief Investment Officer at Global X ETFs, said: “China’s importance on a global scale is growing. However, the Sino-American trade dispute remains a concern. We are, for the first time, starting to experience a reversal of globalization. A significant economic consequence of the decoupling between the US and China will be the reshoring of manufacturing from Asia, and we believe that this, coupled with a need to reduce costs, will accelerate trends such as robotics and automation.”
Thematic Investing – Navigating the short-term volatility with a long-term approach
Over the past few months, we have observed how the pandemic has caused structural shifts to our daily lives. These disruptions, triggered by COVID-19, have reshaped our behaviors and driven the emergence of a new stay-at-home economy that will offer opportunities for growth-oriented investors.
Thematic Investing is a long-term strategy designed to benefit from macro-level changes that disrupt and redefine industries. Investors seeking to identify early, substantive shifts to the fundamental makeup of technology, demographic consumer habits, or even physical environments, can utilize thematic strategies to capture these emergent trends in their nascent stages, long before they fully mature. COVID-19 is both an accelerant and market expander for the structural changes behind myriad themes, causing faster adoption among broader audiences.
Jay Jacobs, Head of Research & Strategy at Global X ETFs, said: “The 2010s were all about mobile connectivity. Fast 4G internet and technology-packed smartphones resulted in trends like online shopping, online payments, social media and online gaming that gave rise to entirely new industries and companies. In the 2020s, we expect to see further disruptive growth. Another great leap forward will materialize through the Internet of Things, 5G, and Cloud Computing. Data created by these themes will be used to teach autonomous vehicles, develop medicine, make our cities safer and cleaner, and feed AI systems which will be more capable than ever before.”
Disruptive growth - How COVID-19 is accelerating the adoption of certain themes
Global X has identified the following four themes as highly relevant to this disruptive environment, with the aim of empowering investors to benefit from these developments.
Video Games & Esports – Benefiting from Stay-at-Home orders:
- Video games network traffic is higher than ever amidst the continuing social distancing and stay at home orders that are at varying stages across the globe. According to Verizon, online game traffic rose 75% in March. Annual gaming revenues are expected to grow by 31.7% by 20221, boosted in part by the strong value-per-dollar entertainment that consumers have relied upon during quarantines.
Robotics & AI – Automation may benefit from reshoring efforts:
- Recent macro events like the US-China trade conflict and the COVID-19 outbreak will further fuel the trend of companies reshoring their manufacturing supply chains and relying on robotics. The global robotics market is expected to expand to nearly $499 billion by 2025, a 26% CAGR2 and the global AI market to expand to nearly $169 billion by 2025, a 72% CAGR3.
Cloud Computing – Surge in “Work From Home” support by cloud infrastructure:
- Infrastructure as a service (IaaS) and Software as a service (SaaS) are indispensable parts of an increasingly flexible work and entertainment environment, with the public cloud market growing at around 25% in the APAC region4.
E-Commerce – A new age for retail:
- Despite e-commerce being around for over two decades, its adoption is still in its very early stages globally and therefore offers plenty of growth potential through new trends like augmented reality (AR), virtual reality (VR), and social commerce.
The rise of the global ETF Industry and the greater inclusion of ETF positions in asset allocation
Luis Berruga, CEO of Global X ETFs, said: “While 15 years ago there was only US$400 million globally invested into ETFs, the assets under management rose to more than US$6 trillion in 2019. The disruptive growth of the ETF industry was driven by transparency, tradability, lower fees and tax efficiency. We have seen the growth of ETFs in Europe and Asia and we expect that trend to continue, due to increasing ETF adoption and product innovation in the region. An increasing number of investors are coming to the conclusion that ETFs enable them to look beyond short-term macroeconomic shocks and capitalize on future trends and as a result are increasingly including ETF positions in terms of asset allocation.”
About Global X Management Company LLC
Global X Management Company LLC was founded in 2008 with the mission of listening to and empowering clients to invest wisely in unexplored and intelligent solutions. Our company lineup features more than 70 ETF strategies. While we are distinguished for our thematic growth, income and international access ETFs, we also have core, commodity, and alpha investment tools to suit a wide range of strategies. Global X Management Company LLC is a member of Mirae Asset Global Investments Group, a Seoul-based global enterprise which offers asset management expertise worldwide. Know more our company at www.globalxetfs.com.
About Mirae Asset Global Investments (Hong Kong) Limited
Mirae Asset Global Investments (Hong Kong) Limited (“Mirae Asset”) is an asset management organization with over $146 billion in assets under management as of December 2019. The organization provides a diverse range of investment products including mutual funds, exchange traded funds (“ETFs”) and alternatives. Operating out of 15 offices worldwide, Mirae Asset has a global team of more than 830 employees, including 180 investment professionals.
Mirae Asset’s global ETF platform features a line-up of more than 360 ETFs that offer investors high quality and cost-efficient exposure to newly emerging investment themes and disruptive technologies in the global markets. Mirae Asset’s ETFs have combined assets under management of USD39 billion as of December 2019) and are listed in Australia, Brazil, Canada, Columbia, Hong Kong, India, Japan, Korea and the United States.
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COM-2020-07-03-HK-SG-TW-THA-R-MKT
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1Newzoo, 2019.
2Statista, Size of the global market for industrial and non-industrial robots, 2018.
3Allied Market Research, Artificial Intelligence Market by Technology, 2018.
4Boston Consulting Group, Ascent to the Cloud: How Six Key APAC Economies Can Lift-off, 2019.
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