Publications

- December 1, 2020: Vol. 7, Number 11

Roundtable: What do you consider the chief thematic investing theme of the current decade?

by contributing executives

Amy Raskin, senior managing director and CIO, Chevy Chase Trust

We think the 2020s will be the decade molecular medicine finally changes the way disease is diagnosed and treated. There are hundreds of promising drugs in the pipeline as a result of molecular medicine research; early success in diseases such as sickle cell anemia and muscular dystrophy are encouraging biotech companies to embrace this approach. Toward the second half of the decade, we expect attention will turn to using quantum computing to revolutionize protein modeling and solve other complex problems that are beyond the capabilities of current computing technology.

 

David Giunta, president and CEO for the U.S., Natixis Investment Managers

Few trends have changed investing as quickly and comprehensively as ESG, and its impact continues to grow. ESG gives investors a wider lens for their research, which opens up new possibilities for active investors to generate alpha. ESG is also unique in that it influences not only how people invest, but why they invest. For example, our research shows that over 60 percent of individuals would save more for retirement if their plan offered ESG options. That combination of increased incentive to invest with the potential for better returns is a formidable trend.

 

Josh Rogers, CEO, Arete Wealth

A new mode of financial exchange is needed, and that new mode is cryptocurrency. Venmo, Apple Pay and PayPal have emerged in the United States, but these pale in comparison to systems such as AliPay and WeChat, which account for the vast majority of consumer transactions in China. Today, we are developing cryptocurrency, and this is no joke and not just a novelty. Cryptocurrency has many advantages over all previous modes of exchange. For example, the blockchain keeps track of transactions from anywhere. No country controls the currency, as it operates in a necessarily decentralized way. A completely digital currency is as lightweight as space itself, with nodes easily hosted on satellites and spacecraft. What’s more, the blockchain, which is the backbone of cryptocurrency, is always on.

 

Marshall Rowe, president of business owners’ services and managing director of Northern New England, The Colony Group

Many wealthy families want to align their capital with one of the most pressing challenges facing our country and the planet — global warming — or, more specifically, the energy transition from hydrocarbon fuels to renewables. The capital required to de-carbonize and halt greenhouse gas emissions will easily grow to the hundreds of billions and impact every industry. It is an investment theme that may drive the transformation of our economy.

 

Rael Gorelick, partner and head of investments, Biltmore Family Office

In a word, the chief thematic investing theme of the 2020’s will be yield. In this zero-interest-rate world, we expect bonds to provide historically low returns. Sources of stable risk-adjusted yield are few and far between. Investors will be pushed to take on increasing risk, liquidity and complexity until rates increase. When rates do increase, the ensuing unwind could be spectacular.

 

Mitch Kovitz, founder, principal and co-CIO, Kovitz

Various events and environments could cause a contraction in earnings multiples, but I would say the most likely is an increase in interest rates either brought upon by resurgent inflation or the unwillingness of foreigners to fund our debt at near-zero interest rates. Watch out for higher rates. It could be the single largest determinant of investment success over the next decade.

 

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