Rathbones event

Disruption is coming – but could opportunity follow close behind?

Rathbones has recently written a report on the impact of technology on the modern world, in particular the threat and opportunities for investors. Some of the themes covered in the report are highlighted below.

Global developments in artificial intelligence, energy generation and genetic medicine are seemingly announced on a daily basis. And their impact is sure to be felt in all of our lives at some level. But in terms of investment, what opportunities might they create? And what must we consider before financially committing to these new disruptive markets?

It’s said that today the world is changing more rapidly than ever. Certainly technology is developing at a remarkable pace, altering how we work and live. In the wake of this fast-moving upheaval, new industries appear while old ones slip away, start-up businesses replace traditional names and our expectations as consumers are reset.


Healthcare gets personal

Advances in healthcare, for example, mean ‘personalised medicine’ is on the rise.  Linked to the mapping of the human genome and the huge cost reduction in this process since the turn of the millennium, it is all about designing medicine based on an individual’s genetic map. As Mona Shah, Head of Collectives at Rathbones Investment Management explains, “Personalised medicine could transform every part of the healthcare sector, from R&D and clinical trials, to diagnostic testing, regulation, healthcare provision and insurance.

“Governments can achieve greater efficiency in healthcare while improving success rates for patients by embracing personalised medicine. A key challenge will be the storage and analysis of the huge quantities of patient data. While these are early days for this investment theme, personalised medicine accounted for $94bn of sales in 2015, and this is expected to rise to $178bn by 2022.

“Pharmaceutical companies with strong pipelines in immunotherapy or other areas of personalised medicine look well placed to strike the genetic jackpot.”


The rise of the machines?

Looking at automation and the job market, change is also afoot, with ‘intelligent’ technology being used to support (and replace) human workers in white-collar environments. However, Rathbones’ Asset Allocation Strategist Ed Smith suggests that now is no time to panic.

“Despite alarmist reports, a robot-fuelled dystopia is decades away. The risk to most jobs from automation is low for the foreseeable future. But history does suggest that the trend is likely to affect particular groups of mid-skill workers, possibly concentrated in particular regions. As a result, greater income inequality could increase social and political tensions – in other words, the potential for technology to ignite further populism is high.

“The challenge for politicians is to find better ways to soften the impact of change on specific groups, and to articulate better the wider social and economic benefits of technological progress.”


A more sustainable revolution?

Another area for consideration is energy generation, and how solar and wind sources – along with energy storage – will impact on the utilities sector and driverless transport.

In this, Rathbones’ Head of Equity Research Sanjiv Tumkur takes the lead. “Through advances in battery storage technology, we are on the cusp of major changes for electric vehicles and alternative energy, and ones which will emerge much more quickly than the market currently expects.

“The private sector will need to respond: these changes are likely to be disruptive to utilities – with the ability for homes to go ‘off grid’ – and car manufacturers.

“Companies which make or supply materials for batteries, solar cells or wind turbines might in theory do well, but rapidly growing markets often see sharp unit price falls that cause a lot of players to go out of business, as was seen in the solar panel market.

“The battery revolution is underway, and we will be monitoring developments in order to identify the winners and, perhaps more numerous, the losers.”

As these new technologies create new industries, and disturb the status quo in more traditional sectors, so new opportunities for investment arise. And while some might view change as a cause for caution, the alternative argument says innovation is making the world a more productive place. With increased productivity comes the chance to improve investment returns.

Clearly, with so many factors at play, this is far from a binary debate. But one thing is for certain – change is constant. So taking time to understand how to maximise the financial opportunities it creates is a wise investment for anyone.

Rathbones is holding a special investment event looking at the impact of disruptive technologies, on Wednesday 24 May at Matfen Hall, Matfen. For more details, contact Dianne Coulthard on 0191 255 1455. Alternatively please email Dianne at dianne.coulthard@rathbones.com

You can also take a detailed look at the investment impact of disruptive technologies in a recently published Rathbones report on the subject. To access your free copy, visit rathbones.com/tyne.