Neither is it about spotting the next ‘big thing’ and this remains true during the pandemic. Covid-19 has been a positive tailwind, but we look for companies with strong growth prospects over five years or more. While Zoom has undoubtedly had a brilliant year, the challenge for investors is to identify whether this is a one-off boost or will lead to a sustained uplift over several years.
There are clear technological trends that have been catalysed by Covid-19: digitisation, the cloud, e-commerce, digital payments, design and simulation software, and connectivity in healthcare and fitness data. The backbone of many of these trends is semiconductors, which are subsequently seeing accelerating demand. We own leading stocks across all these areas of technology, not just the household names.
Digital strategies for companies are no longer nice to have, but an existential risk if they are absent or flawed. Yet we are still in the early stages of the technological revolution. For example, despite cloud computing being around for over a decade, less than 20% of workflows are in the cloud; remote working will clearly change this. Sectors such as healthcare have even further to go. With so much potential, we will continue to have a meaningful active allocation to technology in our sustainable funds.
George Crowdy is co-manager of the recently-launched Royal London Global Sustainable Equity Fund. Find out more about our range of sustainable funds at rlam.co.uk/sustainable
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