Josh Sambrook-Smith, global thematic equity analyst at Sarasin & Partners
The digitisation theme emerged more than 20 years ago during the dotcom boom, but did not end when the tech bubble burst in the early 2000s.
Far from it – digitisation is a multi-decade phenomenon. The interplay between technology, economics and behaviour includes a strong feedback element.
As technology develops, the economic advantages of a product change, altering behaviour, in turn influencing the evolutionary direction of the technology itself.
The results are six discrete, investable long-range trends within the digitisation theme: digital content, cloud, e-commerce, processing power, analytics and network traffic.
Importantly, many of these companies and trends are established, and so are their business models – with proven, demonstrable, recurring ways of generating revenue.
This not only reduces the likelihood we stray into speculative ends of the market, but also imbues our investments with a vital element of sustainability.
For example, it makes a big difference for a long-term investor that ServiceNow enters into a subscription relationship with its customers or that Equinix locks customers into five-year minimum contracts.
It is difficult to imagine this theme being displaced in the foreseeable future, and we expect it to maintain its durability and investability well into the long run.