Fifty years ago, it was normal for companies to have computers as tall as houses. Today, tablets and smartphones offer vastly more computing power at vastly lower prices and vastly smaller sizes.  Computers are omnipresent, in heating thermostats, in smartphones, even in microwaves. Generation Y is the first that has grown up with this digital abundance and uses it in all areas of life, but the online bug has spread across the whole of society – from the “Millennial” to the “Silver Surfers”.

It’s a mass phenomenon. Playing games in virtual reality? Certainly! Shopping on the internet? Of course. Banking transactions? Likewise. It’s an Archimedes lever of technology, and we are all using it to leverage our lifestyles. And laying a trail for investors that runs throughout the economy.

Without a doubt, the biggest area is Omni-Channel-Shopping, the shopping spree across every kind of digital device: browse the online shop, order from anywhere, and deal with product enquiries via chat. For some people it’s a chore but for many, it’s a pleasure or even an obsession. Figures from China show that shopping has become a hobby. At least 77 percent of the Chinese interviewed in one study endorsed this idea.

Shoes, certainly. Even trousers and books change hands on the Internet, just like they used to in stores. The luxury segment is also becoming big online. But there are also many things that used to be unimaginable online: for example, everything that constitutes a healthy diet. Increasing prosperity of the world’s population also means increasing interest in organic food. A market that is being watered in a virtual sense by digitisation. Such as when healthy food is portrayed as sexy thanks to channels like Instagram. But, digitisation naturally also includes services and has galvanised commercial sharing, most obviously for holiday accommodation, and it’s created a vast new pool of peer reviews to help consumers choose.  According to studies, the online travel market is expected to weigh in at 820 billion dollars by 2020, just over 700 billion euros. Because it’s quick and easy. Online information, online booking, online presentation; Trivago, Expedia, Instagram.

Everything for everyone at all times; and what represents a beautiful new world for consumers, represents considerable expenses for companies first and foremost. In 2017, for example, global organizations spent $1.2 trillion, just over a trillion euros. Not only for improving products, but to drive digital transformation. Incidentally, 30 percent of this expenditure came from retailers, healthcare companies, banks and insurance companies. And where is this money going?

Above all, cloud technology, i.e. the location-independent storage of data, is growing. The motto concerning new customers and their data is: being prepared is everything. If data is the gold of today, it must be maintained in appropriate safes: secure storage options. The forecast for annual growth over the next 5 years is 29.4 percent. A development that not only revolutionises buying and booking, but also advertising. Because advertising makes less and less use of broadcast media.  It is increasingly more precisely controlled by customer group and consumer habits. And the same applies to search engines.

These services do not have to be provided by large US companies; quite the contrary. After all, FAANG shares (Facebook, Amazon, Apple, Netflix and Googlehave long been world-famous and valued accordingly – they constitute a good half of the market value of the entire Nasdaq 100 index. This has almost made them the investment for everyone. But the focus of any Zeitgeist is not in what everyone already knows, but in the latest trends. And indeed, less well-known suppliers have positioned themselves in the slipstream of the FAANGs, many of them with a regional focus. They have the potential to build market share in a fast-growing market, as they offer customers tailor-made consumer worlds. And for investors, this gives a Zeitgeist with the opportunity for sustained outperformance.

Giles Keating

The Smartphone has broadened out now into really intense use by older people, by younger people, and there’s a serious investment point there: that really means that the market for all the services is still growing really rapidly. But we go beyond the high valued FAANG stocks. We don’t actually include them at all. We invest in some of the big regional players who are really going to be taking market share from those FAANGs.

Robert Halver

It’s a phenomenon: as a result of digitization, human workers will be replaced by machines. That means we’ll have an awful lot of leisure time that needs to be filled. And it means everything that can be done with streaming, with online gaming, will be driving a gigantic wave of growth in the years – if not even decades – to come. Investing in it is a must.

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