The recent surge in geopolitical risks has reminded companies and the U.S. government that stable trade relationships can no longer be taken for granted. Not only could operations be disrupted by Covid, but trade partnerships could suddenly evaporate through sanctions.
In response to this new geopolitical landscape, corporations are reshoring production by switching their supply chains from “just in time” to “just in case.” Washington, meanwhile, is reviving trade and industrial policy to refocus the production of critical technologies domestically (see the recent Chips Act).
Stephen Miran, former senior adviser for economic policy at the U.S. Treasury and co-founder of asset manager Amberwave Partners, argued in Barron’s that this new world order would mean two things from an investor’s standpoint.
One is that “companies with the most secure supply chains and customer bases are less exposed to recurrent shocks originating abroad, and face fewer necessary capital expenditures to secure themselves,” he wrote, adding: “That means that companies with a strong focus on U.S. jobs, security, and growth should be expected to outperform in this dangerous new world.”
Two is that “volatility will probably remain persistently high.”
In front of such a backdrop, Miran believes “global macro investing, something of a black sheep in a world of low volatility, will have a renaissance as large dislocations become more frequent.”
For investors looking to invest in companies related to the megatrends of technology disruption, digitally connected consumers, or infrastructure-enabling decarbonization, Neuberger Berman has recently launched the following actively managed ETFs: the Neuberger Berman Connected Consumer ETF NBCC, the Neuberger Berman Carbon Transition & Infrastructure ETF (NBCT ), and the Neuberger Berman Disrupters ETF NBDS.
NBCC seeks to invest in companies that could benefit from Generations Y and Z being the dominant consumers. The team will evaluate the web search and spending tendencies of millions of consumers and the daily call transcripts and filings of over 4,000 public companies to identify the opportunities that appear best positioned for mass adoption in the digital age.
NBCT, meanwhile, seeks to invest in companies that are focused on or are transitioning their business to focus on low-carbon resources, electrification, and/or carbon reduction solutions.
Finally, NBDS seeks to invest in companies pursuing disruptive growth agendas that the team believes will shape the future and can invest globally across market capitalizations. The fund will seek innovative companies consistent with a longer-term investment horizon. By using machine learning, language processing, and cloud computing techniques, the portfolio team will have access to daily analysis of six terabytes of data to provide a highly targeted portfolio of roughly 30 companies.
“By taking heed of changing megatrends and their implications for both economic policy and asset markets, investors can give themselves some protection from the fireworks in the markets,” Miran added.
For more news, information, and strategy, visit the Megatrends Channel.
