audit
Water shortage and the “house” financial system have emerged as one in every of UBS’s prime 5 favourite long-term funding themes, with its month-to-month report highlighting a variety of concepts influenced by technological advances, useful resource shortage and social change.
Water shortage, variety and equality, house, meals revolution and client expertise— Alexander Stiehler, thematic head of Lengthy-Time period Investments (LTI), stated on Friday that the order was “probably the most compelling funding alternative proper now.” UBS regarded on the valuation and momentum indicators driving its LTI theme and recognized notably well timed ones.
The report comes as traders seem to have locked in on a man-made intelligence funding development that has helped push the S&P 500 (SP500) (SPY) (VOO) up 12% yr thus far, at the same time as AI performs into UBS’s house theme performs an vital position.
UBS discusses sectors on this report however doesn’t specify particular person shares or funding autos:
water scarcity
Estimated +$655B subject dimension is predicted to develop at a median annual mid-single digit fee over the subsequent few years. The biggest class is wastewater therapy or water utilities, adopted by tools suppliers for water exploration, distribution and therapy. The united statesstrategy group is extra optimistic concerning the U.S. industrial sector (XLI). UBS stated the stability between defensive water firms and the cyclical nature of the {industry} makes the theme a great funding throughout cycles.
variety and equality
UBS stated the theme is “cross-industry diversification, a great mixture of defensive, worth and progress types.” “A number of research have proven that bettering variety can cut back the hole between wealthy and poor inside societies, which, if true, ought to enhance GDP over the subsequent decade,” the report states. In the long run, selling progress all through worth chains and processes Numerous and equal firms can obtain superior efficiency, however short-term dangers embrace authorized challenges to affirmative motion in some U.S. states.
house financial system
The momentum is powerful and aligns effectively with UBS’s desire for the Industrials (XLI) sector, notably aerospace and protection. “House-based property and protection expertise are more and more entrance and heart for governments as rising geopolitical tensions spotlight the connection between house economics and safety,” the LTI group stated.
“As well as, the speedy rise of synthetic intelligence supplies new alternatives to leverage space-based infrastructure and the flexibility to synthesize giant quantities of satellite tv for pc information.” Many finish markets are “nonetheless nascent” and the dangers are excessive.
meals revolution
Local weather change and different components pose challenges to entry to high-quality, inexpensive meals, requiring provide chain transformation. It sees the “massive winners” as digital providers, on-line platforms, after which automation. “This theme goals to revenue from the potential of latest investments, whereas combining the defensive traits of client staples (XLP) and expertise (XLK),” UBS stated. Buyers may also take into account enterprise capital, affect and sustainable investing Technique.
Consumption expertise
Expertise and society are the primary structural drivers. The primary alternatives are concentrated in conventional fields reminiscent of journey and leisure, in addition to rising digital fields reminiscent of digital universes and on-line actions. “The theme performs effectively on high quality metrics as the corporate has a powerful stability sheet and excessive ROI, nevertheless it trades at a comparatively excessive valuation,” UBS stated.
- Business-focused ETFs embrace: (VIS), (IYJ), (PPA) and (FIDU)
- House ETFs: (ARKX), (XAR), (SPRX) and (UFO)
- Amongst Water ETFs: (AQWA), (FIW) and (PHO)
- Client Staples ETFs embrace: (FSTA), (FXG), and (PBJ).
