Investors must embrace disruption in portfolios

Investors must turn their focus to disruptive innovation for portfolio opportunities that are fast emerging from the exponential growth of technological advancements, according to Nikko Asset Management.

Presenting at the annual Nikko AM Foreword 2018 in Sydney last week, Nikko global head of investment and chief investment officer Yu-Ming Wang said: “From an investor standpoint, it’s all about constructing portfolios that are unbreakable, especially in times of uncertainty as we are in today.

“In how to do that, we give our investors one suggestion, which is instead of running away from chaos, you run to and embrace chaos.”

Wang said ideas and themes involved in this approach include embracing disruptive technology and embracing change taking place in China, such as the explosive growth of technology and middle-class consumption.

“For positive asymmetry of returns versus risk, I suggest two fertile grounds for stock ideas: innovation in the early phase of exponential growth and companies catering to the increasing wealth and purchasing power of a billion Chinese consumers,” he noted.

In his insight paper, “Unbreakable: Embracing chaos in markets”, he explained fragile investment ideas cannot withstand the test of time and buckle when markets descend into chaos.

But those that can thrive amid disruption are the “holy grail of sustainable investing”, he said.

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