- UBS said that investors will benefit from buying fintech, healthtech, greentech, and 5G stocks as these 4 sectors will disrupt the technology industry and become the dominant investment themes throughout the next decade.
- These themes will dominate the market as last decade’s leaders—technology and consumer discretionary—lag behind.
If the last decade was about investing in technology, the “Next Big Thing” in the 10 years ahead will be investing in “disruptors” in sectors ripe for technological transformation, according to UBS. In its “Year Ahead 2021” outlook note released last week, the world’s largest wealth manager said that investments in fintech, healthtech, greentech, and 5G will dominate the market as broader technology stocks lag behind.
“Since 1973, if a US equity sector was a top two performer over the previous 10 years, it had only an 8% chance of staying there over the next 10 years, and a 25% chance of fall- ing into the bottom two,” UBS said. “This pattern suggests that ‘the Next Big Thing’ probably won’t come from the top two sectors of the last decade: technology and consumer discretionary.”
Here are four up-and-coming investment themes that UBS says have massive upside in the next decade.
The coronavirus pandemic has sparked a shift towards contactless and mobile payments and e-commerce that UBS says will lead to a permanent shift in consumer spending habits. At the beginning of 2020, cash and checks still accounted for 39% of payment flows around the world, indicating the fintech space has further growth ahead.
“We expect fintech firms to enjoy earnings growth rates in the mid-to- high teens over the next decade, making the industry one of the fastest-growing globally. We think the industry has the potential to expand to USD 500 billion by 2030 from USD 150 billion in 2018,” said UBS.
UBS said the pandemic has simultaneously increased patient focus on health while reducing people’s ability to access health care. Because of this, telemedicine will gain rapidly in the next decade. UBS added that investors should seek out stocks in advanced diagnostics as well.
“We think health technology will play a critical role in improving the efficiency and quality of healthcare in the decade ahead,” UBS said.
Investors should be on the lookout for opportunities in renewable energy, especially as more major economies of the world like the EU and Japan pledge to go carbon neutral in the next 30 years, UBS says. Today, only around 8% of global electric power is generated by solar and wind, but that figure will need to rise to around 30% to meet sustainability goals, indicating strong growth prospects for renewable energy. UBS also sees investment opportunities in batteries for electric vehicles and hydrogen energy.
Following Apple’s launch of its first 5G-enabled iPhone, UBS expects a wave of interest in the technology in a wide range of industries including real-time automation, video services, highly-connected smart cities, and connected vehicles.