The term “megatrend” was coined by US political scientist and author John Naisbitt at the start
of the 1980s.
Indexing Thematic Megatrends
The term “megatrend” was coined by US political scientist and author John Naisbitt at the start of the 1980s. It refers to powerful macroeconomic transformative forces that have a major impact on countries, businesses and societies around the world, disrupting the way products and services are produced, delivered and consumed. Such powerful forces typically tend to span business cycles, industries and geographies, creating a vicious cycle of sustained disruption resulting in structural shifts and irreversible transformations in the global economy, businesses and society. Megatrends are by no means a new phenomenon, with countries, industries and society all experiencing them, as noted by Naisbitt in his best-selling book by the same name.
Thematic investing is a relatively new development in modern portfolio management that is driven by such megatrends. Although theme-based investing, e.g. in water utilities or infrastructure, has had its day in the sun in the past, thematic investing in its current form traverses geographies and industries/ sectors with a forward-looking investment philosophy that typically focuses on the anticipated beneficiaries of a particular megatrend that has been identified. Driven by the disruptive power of innovation, thematic investing has gained in popularity and momentum over recent years from what may perhaps be considered to have originally been a bastion of a few well-informed active investment managers.
The above is an extract from a recent STOXX research report that explains the STOXX approach to its family of thematic indices, familiarizing readers with the data sources and the related index construction methodologies used to incorporate them.
To read the full report, please click on the link below
