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Next Generation: Thematic investing and megatrends at Julius Baer

Julius Baer’s Next Generation investment philosophy prepares clients – and their portfolios – for a changing world. While no one can predict the future 100%, certain megatrends are unfolding that will shape our lives, societies, and economies to come. The Julius Baer Lounge at Art Dubai 2022 as well as the ‘Welcome to the Future’ event at Dubai’s Museum of the Future offered an experiential understanding of thematic investing, playing with the ‘Digital Disruption’ megatrend.




Why megatrends matter for investors

‘It won’t happen overnight, but it will happen’ is a saying particularly pertinent to Julius Baer’s Next Generation investment philosophy. This thematic investment approach deals with – and harnesses the potential of – the long-term structural trends that are shaping our collective future. These so-called megatrends are affecting every aspect of our lives. They cause irreversible changes in our society and influence consumers and companies alike.

A simplistic metaphor is to compare megatrends with a wave in the ocean: the wave starts off small, and not necessarily noticeable, but as it rolls onwards it grows substantially in size and momentum.

Carsten Menke, Head of Next Generation Research

Given their massive impact, why aren’t we focused on megatrends all the time? Put bluntly: the day-to-day noise from the markets and current events is often much louder and much more attention-grabbing. As Head of Next Generation Research Carsten Menke explains: “A simplistic metaphor is to compare megatrends with a wave in the ocean: the wave starts off small, and not necessarily noticeable, but as it rolls onwards it grows substantially in size and momentum. At some point the wave grows so big that it is neither stoppable nor reversible. The same holds true for megatrends.”

But back to banking. The waves in the financial field are the megatrends defining our Next Generation investment themes. And while such trends do not always appear meaningful at first sight, they can become so powerful they are neither stoppable nor reversable. Often interconnected, their cumulative effect can bring a shockwave of its own. "Julius Baer’s Next Generation investment philosophy translates these trends into a tangible investment framework for clients,” Carsten Menke says. “It makes sense of the long-lasting and structural shifts caused by megatrends and assesses the implications they have, and may have, on our economy and society.”

A closer look at investment themes 

Megatrends don’t arise from a vacuum. They are born from the societies we live in nowadays. Next Generation investing is a thematic approach that reconciles long-term structural change with the short-term developments around us and today’s economic reality. It’s about preparing clients for a future that’s unfolding here and now; yet concerns long-term changes that extend beyond the business cycle in terms of dynamics and duration.

A pioneer in thematic investing, Julius Baer’s Next Generation investment philosophy currently has the following themes in focus:

In the spotlight: Bringing ‘Digital Disruption’ to life

As a wealth manager, Julius Baer creates and manages wealth for its clients. Yet the bank has a purpose of creating value beyond wealth and seeks to positively impact the societies in which it operates. In March, the Julius Baer Lounge at Art Dubai 2022 provided an opportunity to bring an investment theme ‘to life’. This allowed guests and clients to become acquainted with the theme of ‘Digital Disruption’ experientially – both through the artwork commissioned by Julius Baer and also via client events.

Fittingly, the choice of art for the lounge itself was a nod to the region, Julius Baer’s long-standing support of emerging artists and, of course, technology. Artist James Clar was invited to return to his former home of Dubai and create an immersive and interactive art installation called ‘Cloud Seed’. The first digital artist to display at the Julius Baer Lounge, James’ piece uses technology to unite viewers, nature, and natural phenomena, allowing viewers to get a taste of the locally practiced weather modification technique of cloud seeding.

Similar to this, Julius Baer recently hosted a ‘Welcome to the Future’ event for clients at the Museum of the Future, where the bank showcased its next generation investment themes using technology driven experiences. Visitors were immersed in a sensory and educational experience: The lounge was designed to be a semi-open pod with a 180-degrees screen and surround sound, plus a touch-activated, curve-angled OLED screen and LED recognition tables. Through interacting with these elements, clients learnt about the Next Generation investment philosophy and its seven different themes in a tangible manner.

“Our clients were able to embark on a journey of discovery that put them in control, inspired understanding of Next Generation investment themes and sparked interaction,” Yves Robert-Charrue, Head Region Switzerland and EMEA, says. “With a focus on Next Generation investment, the entire experience united many different themes central to creating value for clients and their families.

"The transfer of wealth between generations was embraced, for example, as was the need to ensure portfolios are fit for the future. To support conversations about this within families, clients were encouraged to bring their children to the event, reflecting the importance Julius Baer places on the integration of future generations into the wealth management process,” concludes Yves Robert-Charrue.

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