Where to Invest After the Crisis: Meet the 'Futurists' Who Forecast What Happens Next - Where Does That Mean You Should Invest?
While their exotic job title may conjure up images of tarot cards and crystal balls, their skills in divining profitable market trends and opportunities mean their views are keenly sought by major firms.
We asked expert futurists to gaze into a post-coronavirus future and suggest how our lives will change due to the pandemic – and how we can invest in the companies that will benefit from a new way of living.
CLEANLINESS AT ALL COSTS:
Hygiene will be a preoccupation for a long time to come, even if a vaccine is found for Covid-19. Faith Popcorn is a futurist and founder of marketing consulting firm Brain Reserve. She says that after the current focus on deep cleaning in hospitals and care homes, it will be considered necessary in other spaces as well, including at hotels, public arenas and restaurants.
She says: 'We'll want little robots – like Roombas, robotic vacuums – zipping around with UV light and heavy-duty cleaning formulas. We'll also want IoT (Internet of Things) sensors to monitor the safety and purity of locations. As a result, apps to track infection and fevers will be vital.'
Companies such as Byotrol and Tristel, both listed on the junior AIM market, are among those likely to benefit from this emphasis on cleanliness. Both produce high-tech disinfectant and have seen demand soar in hospitals. As users begin to expect similar cleanliness in social spaces, the two companies will have a new customer pool.
Shares in both firms can be bought via major online wealth platforms such as AJ Bell and Interactive Investor. They are among the companies held by Venture Capital Trusts managed by the likes of Amati and Unicorn.
A MINI HOUSING BOOM ...AND A DELUGE OF DIY:
According to futurist William Higham, of consultancy Bright Young Things, many households will come out of lockdown either looking to move or improve their existing homes.
He says: 'Lots of people will have decided that they don't like where they live – so there will be movement in the short term.
'But with many working from home for the foreseeable future, a lot of people will want to improve their home working environment.'
The result, Higham says, will be a boom in loft conversions and garden offices and other structural and decorative improvements to make homes easier to work from.
Garden centres and DIY stores – now they can open again – are likely to do well from pent-up demand.
Companies expected to do well from this focus on the home include out-of-town furnishings stores group Dunelm, which has already put contactless delivery and click-and-collect in place.
Also, kitchen group Howden Joinery – a constituent of the FTSE 250 Index – and builders' merchant Travis Perkins.
Investment funds that give access to these stocks include Aberdeen Standard Investments UK Ethical that has stakes in Howden and homebuilder Bellway.
The fund has generated returns of 7.7 per cent over the past five years, but has recorded losses of 17 per cent over the last year.
The fund's biggest holding is ventilation and underfloor heating expert Polypipe.
Georgina Brittain is manager of investment trust JP Morgan Mid Cap that holds Dunelm. She says Dunelm is 'well placed to continue to taking market share from competitors who are struggling to compete on product, technology, or marketing spend.'
She adds: 'Dunelm's management was one of the first to take a voluntary pay cut at this difficult time which, we believe, shows signs of true leadership.'
The trust, which has recorded losses of 25 per cent over the past year, has Games Workshop as its main holding – another company well placed to deal with lockdown, providing at-home games experiences for teenagers and adults.
A NEW GOLDEN ERA FOR TECHNOLOGY:
With many now accustomed to working at home, a post-Covid-19 world is unlikely to see a rush back to the office.
Instead, offices are likely to be smaller and used for meetings rather than for day-to-day work – with technology taking the strain instead.
David Shrier, the author of a new book on artificial intelligence and the future of work, says: 'The pandemic has accelerated the trends we were already seeing, with more automation.'
He says that although many have so-called 'Zoom burnout', 'we won't want to rush back into commuting into the office and will rely on technology far more'.
Darius McDermott, managing director of investment fund scrutineer Chelsea Financial Services, agrees that technology – and technology-focused businesses – will continue to thrive.
He says: 'Companies have had their eyes opened to the need to have good technology that works well and is flexible. Over the past decade or so, reinvestment in companies has been low and we'd expect more upgrades in the short term. Remote working technology may fall off a little but long term we think it will endure. Companies have seen that meetings are possible without jumping on a plane, and that working from home has proven to work effectively.'
Teodor Dilov is fund analyst at wealth manager Interactive Investor. He says some of the UK's biggest technology stocks are also experts in cyber security which will also be big in a post-Covid-19 era. He adds: 'Companies probably know more about our consumption habits than our closest friends.
'No wonder cyber security is big business. Some of Britain's biggest and best known investment funds and trusts have dipped their toe in this sector.'
One example is F&C Investment Trust. It counts Microsoft in its top ten holdings – a business with many counter cyber crime offerings: from cloud-based Azure, Office 365 through to Windows Defender. Microsoft is also a top holding in Fundsmith Equity.
Shopping and fine dining... in a virtual world :
Leisure companies have been particularly hard hit by lockdown, with public spaces shut and customers no longer allowed to enjoy restaurants, cinemas and other leisure activities.
William Higham, at consultancy Bright Young Things, says there is pent-up demand for 'connection', and people can't wait to socialise again and enjoy leisure time.
Equally, we will be nervous about crowded spaces, making it hard for leisure-related businesses to make a profit.
When we do venture out, says Higham, our dining experience will be very different. He says: 'Restaurants will have lower capacity, more outdoor seating.'
On the Continent restaurants have already started to include more outdoor seating and plastic bubble areas for dining.
In Amsterdam diners have been seated inside small greenhouses in outside spaces. This will be difficult for many restaurants and we've already seen Casual Dining Group, owner of Bella Italia, plan to bring in the administrators.
Faith Popcorn, of Brain Reserve, says many people will prefer to socialise online for the foreseeable future – and that companies able to meet this demand will thrive.
So, for example, online restaurant experiences will be part of a virtual reality boom where we travel, meet friends and play games in a virtual world.
She adds: 'Companies such as Aerobanquets are pioneering virtual reality meals where you watch amazing, artistic landscapes as you eat.'
Microsoft and Alphabet (Google's parent company) are the big companies involved in virtual reality, while Chinese giant Alibaba has an online virtual reality shopping experience which might scratch the social shopping itch while the malls are closed. Investment trust Schroder AsiaPacific has a large holding in Alibaba while Polar Capital Technology has stakes in both Microsoft and Apple.
The Schroder fund has incurred losses of just 1.9 per cent over the past year, but has recorded gains of nearly 58 per cent over five years.
Polar Capital Technology has generated returns of 31.5 per cent over the past 12 months.
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