The tech sector has provided impressive returns to investors in recent history, with software an especially large part of this phenomenon. How long can this continue for? Far from being a "fad" all companies are now tech companies to some extent and investors need to invest in an agile fashion, making the most of companies that disrupt their chosen industries.
AI is one such disruptive factor that will effect nearly every industry in the future. The International Development Corporation says that spending on AI will reach $57.6 billion in 2021. There have been estimates that the market for robotics and automation will reach $1.2 trillion by the year 2025.
The scale of disruption and challenge to traditional industries and companies is unprecedented. Manufacturing is one such industry that will be at the cusp of a massive change in the near future, with half of US and two thirds of German manufacturers planning on installing automated systems within 5 years.
The car industry will be heavily effected by automated systems and AI, with traditional car manufacturers joining the likes of Google and Tesla in the field. For instance, Ford has committed $1 billion to develop driver-less cars over the next 5 years.
So how can these returns and disruptive companies be accessed? Benjamin Matthews of Heartwood Investment Management says that active managers that are familiar with the tech scene and that can identify opportunities at their earliest stage are important.
Healthcare is another area that will benefit from technological leaps, with technologies such as genome sequencing, surgical robotics and more sophisticated diagnostic tools setting the stage for companies that can take advantage of these new developments.
Logistics and warehousing companies could also benefit from the rise of the delivery economy.
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Past performance is not a reliable indicator of future performance.