Suddenly, breathtaking technological advance seems all around us. AI chatbots are computer-driven ‘experts’ that can seemingly help us with anything, space rockets now return to earth intact and robots are moving out of factories and into our lives. All of these themes can excite investors and prompt them to put at least some of their money to work in supporting them. Here we look at 10 of today’s most promising themes and name some funds that offer access to them to ordinary savers.
Some of the fund suggestions give you focused access to that theme alone; others are more diversified but offer at least some exposure to the theme. All of these sectors include both listed and private companies. The latter cannot normally be held (other than on occasion in very small quantities) in open-ended funds or exchange-traded funds (ETFs), but investment trusts can and do invest in unlisted firms. An obvious example is Scottish Mortgage, whose value has jumped in recent days thanks to the strong start made by SpaceX shares after their flotation. The trust had had a stake in the company while it was still private.
It is important to remember that funds investing in future themes may be suitable only as peripheral investments for a portfolio. They can be more volatile and higher risk than broader market funds. Many investors will already have exposure to some of the underlying companies through mainstream funds, such as global stock market trackers. Fund charges also tend to be higher. The funds mentioned are not recommendations.
Here are the 10 themes.
1. Artificial intelligence
What is it?
Artificial intelligence barely needs an introduction these days. We could sum it up as the application of technology to tasks that until very recently required a human being. Its capabilities are rapidly developing and many commentators expect it to delivery big gains in productivity across all parts of the economy.
You can invest in it via these funds:
2. Semiconductors
What are they?
Semiconductors include computer ‘brains’ such as CPUs and GPUs (graphics processing units, such as those produced by Nvidia) and memory chips. Shares in memory makers such as Samsung and SK hynex have soared in recent months. Semiconductors are required in huge quantities for the computers and data centres that power AI.
You can invest in them via these funds:
3. Data centres
What are they?
Data centres are in effect warehouses packed floor to ceiling with computers and connected to users around the world via high-capacity fibre-optic internet cables. They are the key infrastructure for AI.
You can invest in them via these funds:
4. Space
What is it?
Space is becoming a significant arena for economic activity. Once the preserve of national governments and their private sector suppliers, the space economy is now a burgeoning network of fast-growing enterprises, some of which have arrived on the stock market while others remain unquoted.
You can invest in it via these funds:
5. Robotics and automation
What is it?
Robotics and automation apply the power of computing and AI to the real physical world. Once confined to factories, robots are starting to find their way into less structured environments as their capabilities, often powered by AI, grow.
You can invest in it via these funds:
6. Cybersecurity
What is it?
As the world becomes ever more connected and dependent on computers and networks, the opportunities for criminals to profit or simply disrupt multiply too. Protecting businesses and individuals from such attacks has become a huge enterprise in its own right and has spawned stock market darlings such as CrowdStrike.
You can invest in it via these funds:
- ETFs: L&G Cyber Security
- Open-ended funds: Allianz Cyber Security
- Investment trusts: no obvious candidate
7. Healthcare innovation
What is it?
This description covers a range of activities from drug discovery (which can be AI-aided) to gene therapies and advanced medical devices.
You can invest in it via these funds:
8. Quantum computing
What is it?
Quantum physics is the science of the subatomic world, where things behave very differently compared with the everyday world. This strange behaviour of tiny particles can be harnessed to produce computers that work on different principles and in some cases can perform tasks beyond conventional technology. Some experts now judge quantum computing to be on the cusp of widespread adoption and serious commercial application.
You can invest in it via these funds:
9. Energy transition (including nuclear)
What is it?
This is the shift from fossil fuels and traditional electricity generation and transmission to new ‘green’ technologies such as solar panels, wind farms, battery storage, electric transport and smarter grids.
You can invest in it via these funds:
10. Crypto and blockchain
What is it?
Most of us have heard of bitcoin but there is a wide range of competitor cryptocurrencies, including some more geared to everyday transactions and others backed by conventional currencies and therefore more stable. And the technology that underpins cryptocurrencies, the ‘blockchain’, has an even wider range of potential uses because it can support secure record-keeping in a variety of sectors.
You can invest in it via these funds:
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