The next decade: investor insights into pivotal megatrends


For the past 40 years, our world has been shaped by four megatrends: globalisation, expanding workforces, economic growth over environmental sustainability, and growing wealth inequalities. 



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the four megatrends.

The four megatrends shaped economies, generally suppressing input and labour costs while lowering low inflation, nominal and real interest rates, and the cost of capital.

Times have changed. Inflation is back, rates are higher and capital no longer cheap. In the next decade, we envisage four simultaneous shifts driving a complete reversal of the previous paradigm. These new megatrends are:

icon_regionalisedWorld.svg icon_workingAgeDeficit.svg icon_environmentalTransition.svg icon_balancingCapitalism.svg

Regionalised world

Working-age deficit

Environmental transition

Balancing capitalism

Each will be disruptive, generating specific investment risks and opportunities. They will contribute to structurally higher inflation, nominal and real rates, and an increased cost of capital. But this will not necessarily imperil portfolios.

To understand investors’ perspectives on these megatrends, we surveyed more than 1,800 senior institutional and wealth-management professionals in North America, Europe and Asia.

Defining a new era

For this megatrend, our study found different views about the state of globalisation. Overall, the professional investors surveyed are most likely to believe we are currently witnessing a setback in a continuing megatrend of globalisation (40%). The findings identified key economic risks and opportunities posed by changes in cross-border trade, capital and idea flows:

We found professional investors’ views to be evenly split about which industries are most sensitive to reduced cross-border economic activity. This suggests they believe the impacts of a more regionalised world will be wide-ranging and that no industry is immune. With 23% of investors saying they are not adapting portfolios to the current state of globalisation, it is a potential blind spot.

Demographics and investment

When exploring attitudes towards the looming working-age deficit, we discovered that most investors agree that inflation and weaker state-sponsored pension systems would be likely outcomes. However, they also expect the economic adaptation to population ageing will bring some benefits, such as driving technological innovation.

Looking at the impact of ageing on industries, the professional investors we surveyed believe that the finance (54%) and healthcare (40%) sectors will most likely experience the greatest transformations as societies grey and workforces shrink. In response, the top three ways these professional investors are reducing or gaining exposure to sectors at risk are as follows:

Sustainable-investment opportunities

For professional investors, there is a perceived abundance of opportunities aligned with the shift to sustainability, with all (100%) saying they see prime opportunities in the environmental transition. But there are also real risks to manage. We highlight both below.

Overall, the top four areas in which the investors we surveyed see such opportunities are:

Amid increasing regulatory impetus for sustainability disclosures, investors also ranked their favoured approaches for aligning the industry to the transition. The popularity of mandated corporate disclosures on nature use and environmental footprints indicates that transparency is critical. Other preferred methods include supportive policies (e.g. subsidies and tax breaks) and trading credits with a financial value (e.g. carbon credits). 

Populism and unionism

More than 80% of investors agree that income inequality will increasingly drive populism and trade-union power in the coming years. This is likely to lead to policies addressing the balance of economic reward claimed by capital and labour.

Italian and Swiss investors show the strongest conviction that income inequality will lead to greater populism and trade unionism, that taxes on corporate profits and individual wealth will rise, and that wage growth for lower and middle-income workers will increase to combat capitalism’s excesses.

investing in the next decade.

As four megatrends – a regionalised world, the working-age deficit, environmental transition and balancing capitalism – shape economies and markets over the next decade, we believe professional investors need to prepare for a starkly different world.

In a reversal of the previous paradigm, inflation, real and nominal rates, and the cost of capital are likely to rise to structural levels above those seen in the past 40 years.

Portfolios will need to adapt to mitigate risks and capture the opportunities as this economic transition impacts sectors and influences asset-class returns.

In our survey, investors identified a number of risks – such as potentially high inflation or disorderly green investment resulting from economic regionalisation – and pinpointed a wealth of opportunities, like the growth of sustainable solutions provided by listed companies or financial firms poised to cater to retiring baby boomers.

But their answers also convey the challenges faced by investors, such as the adapting of portfolios to the current state of globalisation.

As global supply chains are restructured, sustainable solutions gain scale, sectors are transformed by ageing populations and tensions between capital and labour persist, we hope the data in this report helps investors think ahead about changes already in play.

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For professional investors use only

This document is a Corporate Communication and is intended for Professional Investors only. 

This document is a Corporate Communication for Professional Investors only and is not a marketing communication related to a fund, an investment product or investment services in your country. This document is not intended to provide investment, tax, accounting, professional or legal advice.

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