Show notes

The Investment Intelligence Podcast: Is your portfolio ready for the age of Digital Darwinism?

Host: J.P. Vicente, Head of US Marketing & Client Engagement at Allianz Global Investors
Featured guest:Virginie Maisonneuve, Global Equity Chief Investment Officer at Allianz Global Investors

Notes, quotes and references:

J.P. and Virginie discuss Digital Darwinism—the notion that technological disruption will reimagine the global economy in the coming years at an even more rapid pace than has been the case over the past two decades—and its impact on everything from commerce, education and healthcare and even to the geopolitical world order. They also discuss the investing themes that could dominate this “survival-of-the-fittest” world and the implications for investors.

Some key thoughts and topics from this episode:

How should investors digest the rising volatility seen at the start of 2022 in stocks markets?

“What's really important for stock investors is to use (elevated) volatility to find long-term opportunities at the right price. And, in fact, even though we are talking about the normalization of interest rates, to a certain extent real rates are still cheap and are still very low. In this environment, I think people will want to keep some risk-on and risky assets in their portfolios.”

Explain the concept of Digital Darwinism?

“Digital Darwinism is about the expansion of tech into all parts of societies and all sectors of the global economy. It is happening and we are now at a tipping point where both hardware and software, in terms of cost and evolution are accessible. This in combination with artificial intelligence is now enabling greater impact of technology across the economy and across sectors. It's also opening opportunities where to be innovative and impactful you don't need to always be part of a very large company with a huge research and development budget, you can have an impact coming from very small companies.”

What are the most important themes coming out of this idea?

“From an investment standpoint, you could concentrate around data and connectivity, man and machine, and climate tech.”

What is the opportunity in data and connectivity?

“In this data and connectivity age, we're going to talk about metaverse, the next stage of the internet with the merger to some degree of the physical and digital world. In this subtheme, it's about infrastructure, it's about networking, it's about semiconductors. This will have a huge impact on investors. And with the cloud being more important and really being accelerated, data as storage is important. And one of my favorite themes in data is cybersecurity.”

What is the opportunity in man and machine?

“The convergence of physical and digital is really linked to the advancement of the internet and virtual reality and blockchain, where the main winners are going to be shopping, entertainment, culture, and payment systems.”

What is the opportunity in climate and technology?

“What investors need to look at is not only buying renewables and core substitutions but buying the enablers, the companies that facilitate the mitigation of or adaptation to climate change, through their technologies and processes. The climate crisis can only be (addressed) through the massive use of new technologies and new processes.”

The full episode has even more details on the topics above. Check it out.

You can read the firm’s 2022 outlook, including Virginie’s prescient prediction that volatility in equity markets will provide fertile ground for stock pickers, here. You can also read Virginie’s article about the new chapter in China’s epic story here.

Cultural recommendations:

J.P. recommends The Boy Named If by Elvis Costello & the Imposters, an album that critics say is evocative of the rocker’s late 1970s and early 1980s heyday. “With the punch and pace of yore and the depth and richness of maturity, the singer-songwriter is back at his best,” The Guardian writes.

Virginie recommends maintaining perspective during these challenging times through the simple pleasures of meditation, yoga and walking.

Creativity and editing: Peter Lennox.
Production: Mark Egan.