What is a Megatrend?
A megatrend, like a giant tidal wave, can be defined as as gathering wave of change that is slow to form, nearly impossible to reverse, significantly influences the future, possesses an aura of inevitability and has a far and wide-reaching impact on society. The move to contactless payments, the sustained rise in pet expenditure, the acceleration in chronic diseases with the rapidly ageing population and the adoption of alternative energy sources to combat climate change are some examples.
Why Megatrends?
Insync's global megatrends approach provides greater certainty in a rapidly changing world. Identifying the right Megatrend and the best positioned company has proven to deliver outsized returns with a higher degree of certainty and lower risk compared to many other strategies.
Drivers Fuelling Megatrends
Technological innovation, demographic shifts and the shift to net-zero carbon are significant drivers that fuel many megatrends today.
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Computing Power
Technological Breakthroughs
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5G
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Big data
Demographic Shifts
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Rise of Gen Z population
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Ageing population
Net-Zero Carbon
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Hydrogen
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Carbon capture storage
How are Megatrends different from themes and fads?
There is a major difference between themes and fads versus megatrends. There are hundreds of fads and themes which tend to be shorter term in duration, but much fewer megatrends.
Investors today are aggressively investing in fads based on concept and hype, rather than implementing a rigorous and systematic megatrend based approach.
There was huge excitement in the late 1990s about the internet, but it took 12- 15 years before profitable business models started to emerge. In the initial hype phase, investors lost 70-80% of their capital. This is an example that shows most companies fail in the early stages of a trend.
Megatrends We Invest In
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Samples of Companies We Have Owned
Lululemon
A global 550+ store athletic & activewear apparel retailer originating in Canada, and importantly also has a strong and growing online presence. Initially selling yoga wear, Lululemon recognized many key global megatrends - one being that more people are becoming ever more health conscious. Coupled with excellent financial and sales management skills, it grows solidly beyond its peers. With a focus on the 'feel' of their products, Lululemon has placed significant capital into their R&D for new fabrics, thus positioning themselves as a highly desirable brand for consumers seeking comfort. The significant investment in their web store, R&D and their premium pricing sees Lululemon benefiting from three of our megatrends: the Contactless Economy, Premiumisation and Beauty and Wellbeing.
Qualcomm
The Internet of Things (IoT) refers to machines communicating with other machines (M2M). Where machines & devices interpret their environment via machine learning and sensors, they then make instant decisions utilizing algorithms and powerful chip design with other machines & devices. Qualcomm is a global leader in this fast-accelerating global phenomenon that covers almost every human endeavour. As a connectivity and hardware supplier for many of the world's largest device manufacturers such as Apple, its dominant pricing power and market position results in a future that's very bright irrespective of the prevailing state of the economy. In a world where the IoT is expanding rapidly due to uptake of 5G technology, it is rare to find a device that does not have Qualcomm antenna, a Qualcomm modem or is not utilising one of Qualcomm's 140,000 patents.
Domino's Pizza
Domino's is one of the most recognisable names and brands in the world with a footprint covering over 18,000 stores in 90 countries. Domino's generates most of its revenue through franchise fees and selling the stores the ingredients and equipment necessary to make the foodstuff to the required standard. Pizza is known as a notoriously low margin enterprise. This is somewhat mitigated by the advent of new technologies and offerings by Domino's including new foods and flavours and improved methods for quality control that ensure that more customers are served a higher quality meal. This will allow Domino's to take advantage of the Megatrends of the Emerging Middle Class and consumers seeking Food Away From Home to penetrate new markets and expand its customer base.
Accenture
As the megatrends of Enterprise Digitisation and Workplace Automation become further adopted by corporates, Accenture is primed to help its 9000+ clients around the globe remain at the forefront of adopting these technologies. They have firmly embedded themselves as not only consultants for company projects, but key influencers in the C-suite helping design corporate strategy for future IT projects. Accenture has positioned themselves as specialists on new technology by consistently acquiring smaller firms that have a high level of expertise in cutting edge and emerging areas that will be in demand from larger companies going-forward.
