Capturing the value of disruptive growth with Schroders’ Global Disruption strategy

Disruption is everywhere and affects all aspects of modern life. The exponential growth of the tech power is one of the most powerful drivers of disruption. On average, every two years the capacity of semiconductors, computer memory and bandwidth doubles. This allows for the rise of new services and products, that impact almost every aspect of our daily lives. As such, disruption also a source for all kinds of new investment opportunities. Markets are often slow to recognize genuine disruptive innovation. As a result, the profit growth of truly disruptive companies in the longer run is much higher than market consensus. Just like the impact of the growth of these companies impacts the incumbents much more than markets are willing to accept.

Disruption transcends industries

The impact of disruption is not restricted to one of a couple of sectors or companies. It often transcends industries, explains Gavin Marriott – Product Manager for Global and International Equities at Schroders: “We have identified nine themes where disruption has the biggest impact, such as fintech, digitalization and e-commerce. While fintech was already getting a lot of attention as a result of the fast growing popularity of digital payments, the pandemic has accelerated the pace of growth in other themes. Healthcare is a good example. The industry is traditional, and quite slow to adapt to innovation. But the Covid-virus has sped up the design and deliverance of vaccines. Another disruptive shift is the rise of the digital doctor. Patients have experienced the ease of digital consults. The better patient experience has made the digital doctor more sought after than a visit to the general practitioner.”  

A roadmap to discovering winning companies

Disruption can take a different form in each industry or within themes. Instead of a fixed approach, Schroders uses a roadmap to discovering winning companies across the value chain. This starts with analyzing the companies that are the source of disruptive innovation. In addition there are also investment opportunities to be found among enabling companies, that are the conduit for change. The same goes for adaptors: companies that respond positively to disruptive change. However, investors should avoid incumbents that are losing ground and are to slow in reacting to a changing world.

This approach is as clear-cut as it is dynamic explains Marriott: “Tesla has been the disruptor in the auto-industry. But now the disruptor is being disrupted, as competitors are quickly scaling up the production of electronic vehicles. One of those companies is Ford, which has upped the EV-investments and expects 40 percent of global vehicle volume to be fully electric by 2030. As a result, Ford has shifted from a disruption-denier to an adaptor. These shifts are happening across al kinds of different themes: from the development of DNA/RNA-based medicines to cloud and cyber-security and from the fintech evolution to supply chain management. As an actively managed portfolio, Schroders Global Disruption strategy offers investors access to multiple disruption themes that are playing out all over the world.”

 

 

More information:
For more information on the Schroders’ Global Disruption strategy, please visit our website or contact our team.

 

The views and opinions contained herein are those of the Authors, and may not necessarily represent views expressed or reflected in other Schroders communications, strategies or funds.

 

This document is intended to be for information purposes only. The material is not intended as an offer or solicitation for the purchase or sale of any financial instrument. The material is not intended to provide, and should not be relied on for, accounting, legal or tax advice, or investment recommendations. Information herein is believed to be reliable but Schroders does not warrant its completeness or accuracy. No responsibility can be accepted for errors of fact or opinion. Reliance should not be placed on the views and information in the document when taking individual investment and/or strategic decisions.

 

Past performance is not a reliable indicator of future results, prices of shares and the income from them may fall as well as rise and investors may not get back the amount originally invested.

 

Schroders has expressed its own views in this document and these may change (to be used if the 1st statement above is not being used).

 

Schroders will be a data controller in respect of your personal data. For information on how Schroders might process your personal data, please view our Privacy Policy available at www.schroders.com/en/privacy-policy or on request should you not have access to this webpage.

 

Issued by Schroder Investment Management (Europe) S.A., 5, rue Höhenhof, L-1736 Senningerberg, Luxembourg. Registered No. B 37.799. For your security, communications may be taped or monitored

 

The forecasts stated in the document are the result of statistical modelling, based on a number of assumptions. Forecasts are subject to a high level of uncertainty regarding future economic and market factors that may affect actual future performance. The forecasts are provided to you for information purposes as at today’s date. Our assumptions may change materially with changes in underlying assumptions that may occur, among other things, as economic and market conditions change. We assume no obligation to provide you with updates or changes to this data as assumptions, economic and market conditions, models or other matters change.