Four listed leaders for the biggest global megatrends

As whilst that might sound dramatic and has long been the case, never before has there been so much to play for, for so many of us.  

Ignoring wars, pandemics and other extremities of human behaviour, the ongoing growth of the human population places pressure on our ability to exist and be supported by planet earth - and we need to make rapid and significant changes if we are to be to support our lifestyles long into the future.

The companies that will fare best in the future are already pivoting towards these changes and opportunities, but do you know who they are?

Livewire Markets was fortunate to be invited to an event hosted by Morgan Stanley in Melbourne, to hear from demographer Bernard Salt AM and Portfolio Manager Todd Warren from Tribeca Investment Partners, in a discussion on the biggest demographic megatrends and companies that will thrive in this environment.

Below is a summary of the key themes in the presentations. 

The driver behind the megatrends comes back to population growth

The UN anticipates that the global population will peak at around 10.4bn in the 2080s - we hit 8bn last year.

“To sustain our needs such as food, energy, space, we need to look for alternative ways of doing things,” says demographer Bernard Salt.

To add to the complexity of the situation, Salt notes that there is likely to be a skills shortage - our populations are ageing, and birth rates are not at a level that will be able to sustain and support this.

It’s one of the foremost concerns of our time and driving megatrends in terms of the green energy transition, digitisation and automation - including in the agricultural space.

Being at the forefront of change is a massive opportunity.

Salt argues that Australia’s best opportunities lie in energy and agriculture for the future. Unsurprisingly, these sectors are a heavy focus of Tribeca Investment Partner’s 2050 strategy which focuses broadly across decarbonisation activities.

The big financial opportunity in decarbonisation

While we commonly think of decarbonisation in terms of energy needs, the truth is many of our activities emit greenhouse gases and will need to evolve for us to continue to enjoy a certain quality of life as the population continues to rise. 

Greenhouse gas emission by sector

The financials might paint a terrifying picture of required spend - but it’s worth remembering this creates enormous opportunities for companies to benefit.

“China needs to spend $17tr on power and transport alone to achieve netzero by 2060. It’s looking at $2tr per year to decarbonise. And that’s just China. Every country in the world is spending,” says Warren.

“Decarbonisation could have 3-4x as large an impact on global commodities demand as the urbanisation of China had,” Warren says.

The 2050 strategy

Tribeca’s 2050 strategy focuses on decarbonisation and electrification, but it comes with a stringent approach to investment. There are often a range of concerns with ESG-focused strategies, with one being that companies are selected more for ESG credentials rather than balance sheets. Warren avoids this with a strict approach to both.

To avoid this problem, companies must fit the following:

In addition to this, Warren notes the 2050 strategy ensures a diversified allocation to capture upside from multiple decarbonisation verticals and make heavy use of on-the-ground research for hard-to-understand sectors.

Warren uses a ‘barbell’ approach to building the 2050 strategy. This entails the use of long-standing defensive names to act as core holdings and support, and satellite tilts using cutting-edge small caps and private companies.

The names of the future

There are a number of long-established, profitable names that feature in the 2050 strategy. Some of the big opportunities Warren tips for the future follow, and there’s even an Australian small-cap on the list.

The private companies leading the charge

The 2050 strategy also uses private companies and carbon credits as part of its allocation. Two private companies that Warren tips for future growth are:

“The price of carbon is too low. People change their behaviour if there is a hip pocket incentive,” says Warren.

Profitable change

While it can be easy to dismiss decarbonisation and other such themes as heart before finance, Tribeca is a firm believer you can make money from the essential global change with the right focus. The 2050 strategy is testament to this.

Thinking of sustainability is not just a matter of the heart, it might just be essential for future investment returns.

Managed Fund

Tribeca 2050 Strategy Fund (Class A)

Global Shares

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