Investors should choose active asset managers that are going to be positively exposed to technological change, said James Dowey, chief investment officer at Neptune Investment Management.
During an interview with Investment Adviser’s Ellie Duncan, Mr Dowey pointed to technological changes or “tech-risk”, which he said is going to be the big differentiator for stocks across global portfolios by making them more vulnerable.
He advised investors to seek active managers who are aware of changes to technology and understand how this could to disrupt the business model of the companies they are invested in.
“You need managers who are able to miss the big disaster stories. It’s not going to be particularly straightforward over the next five to 10 years.”
He also said it is important for clients to recognise that their earnings are particularly vulnerable to tech-risk, as its pushing down wages and taking some of the gains from economic growth away the workers.
Energy was highlighted as the sector where technology was likely to play a bigger role, and Mr Dowey said it was likely to have its world “turned upside down” in the next decade. “You ain’t seen nothing yet”, he said.
“Investors need to be on their toes in terms of taking a view on these big shifts in the economy and taking a view on whether they want to avoid exposure to these very big changes.”
Talking about the big theme of last year, Mr Dowey said 2015 was a “stop-start year” for the US dollar.
“A lot of investors thought it would be a strong year for the dollar.” He said many are pondering whether 2016 is going to be the year instead which sees significant dollar strength.
He said Neptune thinks the Fed will be more aggressive with interest hikes, suggesting it will raise rates once per quarter.
With Neptune overweight Japan in its global portfolios, Ms Duncan asked Mr Dowey what investment opportunities there are in Japan.
He said Japan is either viewed as a “QE trade with a sugar-rush of quantitative easing”, or as a “structural turn-around story”.
“At Neptune we are firm in the belief that it’s the latter,” he said, pointing to the changes to corporate culture to improve the returns to investors.
He also said there is a huge tourism boom in Japan driven by loosening visa restrictions and a falling exchange rate, making the country more attractive to tourists.
katherine.denham@ft.com
4642363113001
myExperience4642363113001
