Technology companies in the cloud, artificial intelligence and Internet of Things space are likely to be the biggest areas of long-term growth, according to Janus Henderson.
The firm said that cyclical companies would benefit in the short-term from the reopening after the pandemic but that those three secular areas would be better trends over the next decade.
Companies had begun working increasingly digitally in the pandemic and were unlikely to revert back, although it may dip as in-person activity increased. This was also the case for households as well as businesses as younger people were using more technology in their homes for everyday tasks.
Denny Fish, portfolio manager on the global technology strategy, said: “These mega-themes are pulling the world’s economy toward an increasingly digital future. There is little place to hide; either companies – and entire industries – must undertake digital transformations to improve both front-office and back-office experiences or risk getting displaced by more forward-looking, disruptive peers.
“While the mega-cap tech and communications companies that buoyed markets during the pandemic are now sharing the spotlight with more cyclical names, they maintain certain competitive advantages that are hard to match. Increasingly, these companies are powered by their ability to collect, analyse and leverage data.
“As data becomes the currency of identifying business trends and wringing out efficiencies across the economy, these platforms stand to create a flywheel that results in unit economics unlike anything the tech sector has previously seen.”