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Capitalising on lucrative digital investment opportunities

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This is a sponsored article from Pictet Asset Management.

Digitalisation, or the integration of digital technology into everyday life is transforming how we work, play and do business. For example, in a success-oriented world, many still dismiss e-sports as a non-viable career choice, stereotyping gaming as a child’s hobby. Yet many may not be aware that global e-sports revenue is projected to reach US$906 million in 2018 (38% YoY growth) and US$1.65 billion in 2021, up from just US$130 million in 20121, highlighting the tremendous growth opportunity in the segment.

Indeed, e-sports is one of the fastest-growing digital segments in Asia where game developers such as Alibaba, NetEase and Tencent are competing to develop and market video games and sell broadcast rights to e-sports matches. The global video games market was worth around US$100 billion in 2017, while the China market alone was worth US$27.5 billion, driven by demand from more than 500 million gamers2. In turn, this massive gaming demand from China is expected to drive growth in China and in the world’s e-sports market.

The shift to digitalisation is also fuelling the rise of other technological advancements such as automation, artificial intelligence, big data, cloud computing, e-commerce and the Internet of Things.

At Pictet Asset Management, we believe that the application of digital technology will continue to impact our daily life and shape the way we invest.

Digital: shaping our daily life

An example of how the shift to digital is transforming our daily lives can be seen in the number of devices connected to the Internet, which is expected to reach 1 trillion by 2035 – from 25 billion in 20153. Meanwhile, smartphone usage will continue to increase while online advertising and e-commerce spending is also set to accelerate. The market opportunity for digital transformation is estimated to be worth US$2.2 trillion in 20193 and should continue to expand as products and services become more user-friendly, more cost efficient and, increasingly, have more artificial-intelligence functionalities embedded.

Digitalisation has also impacted the healthcare sector where there is growing demand for medical technology or “medtech”. In many Asian countries, medtech is developing at a rapid pace, helping to reduce costs, improve quality of care, and expand access to healthcare for patients. The Asia Pacific medtech market is forecast to be worth about US$133 billion a year in 2020, from about US$88 billion a year in 20154, surpassing the European Union as the world’s second-largest medtech market (after the United States), highlighting the potential for growth in this segment and the important role that digitalisation plays in our daily life.

Specialised companies and specialist investors

For investors looking for exposure to the digital segment, funds focused on digitalisation and other megatrend investment themes offer exposure to exciting new trends with the advantage of investment diversification at low cost, thus helping investors save time, effort and expense. While some investors may have missed out on the initial technology-driven revolution over 10 years ago, we believe digital investment offers an attractive entry point to the next potential tech upcycle. One way investors can gain exposure to the digital segment is via the Pictet-Digital Fund, which has a 5-rating from Lipper – the highest ranking – and a 4-stars rating from Morningstar.

What sets Pictet-Digital apart from its peers is its long track record, defensive positioning and Asian focus. With a proven 10-year track record, Pictet-Digital has delivered a cumulative return of more than double the MSCI World Index since its launch in 2008, and returned 39.6% in 20173. The Fund also has a defensive nature and has performed well in times of equity market stress. Moreover, in comparison to its US-biased peers, Pictet-Digital allocates nearly 30% of its investment to Asia, in companies such as China’s NetEase, Japan’s Nintendo and Korea’s Naver.

However, Pictet-Digital does not invest in every segment of the digital realm. For example, the Fund does not have any exposure to the semiconductor sector, as companies in the sector are subject to high capital investment.

Seizing the digital opportunity

At Pictet Asset Management, our investment teams go to great lengths to understand how technological advances impact our economy and to identify companies that are likely to thrive in the digital world. We believe Pictet-Digital’s proven 10-year track record and Asian focus offer an exciting investment proposition given the potential for growth in the digital segment.

Although the initial tech revolution began over 10 years ago, the digital sector looks poised for further expansion, offering an entry point into the next tech revolution. We urge investors to seize the opportunity to capitalise on the future growth of digital.

Learn more about Pictet-Digital, go to: goo.gl/fpqT2j

1. Statista 2018.
2. SCMP.com, 22 June 2017.
3. Pictet Asset Management.
4. McKinsey & Company, February 2016.
The information and data presented in this material are for information purposes only and are not to be considered as an offer or solicitation to buy, sell or subscribe to any securities or financial instruments in any jurisdiction. Investment involves risk. Past performance is not indicative of future results. Before making investment decision, investors should refer the offering documents. Information, opinions and/or estimates expressed in this material reflect a judgment at its original date of publication and are subject to change without notice. They are not prepared for any particular investment objectives, financial situation or requirements of any specific investor and do not constitute a representation that any investment strategy is suitable or appropriate for an investor’s individual circumstances or otherwise constitute a personal recommendation. If in doubt, please seek independent advice. This material has not been reviewed by the Securities and Futures Commission or any other regulatory authority. The issuer of this material is Pictet Asset Management (Hong Kong) Limited.

This is a sponsored article from Pictet Asset Management.

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