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Peter Michaelis
Peter Michaelis 21-06-21

The world in 2041: accessing innovations for the next 20 years

Past performance is not a guide to future performance. Do remember that the value of an investment and the income generated from them can fall as well as rise.

Over the 20 years since the Sustainable Future funds launched, we have experienced huge transformation across so many facets of life, and Covid-19 has shown this change will likely accelerate as we move past the pandemic and address many of the other challenges to a cleaner, healthier and safer future.

There have been welcome improvements in poverty reduction and health outcomes in the past two decades, although far more is needed on both and areas such as biodiversity, carbon emissions and inequality have deteriorated. This means we need to continue to invest in companies driving improvements. With this in mind, the Liontrust Sustainable Investment team have cast their minds forward another 20 years to forecast what changes they expect across a range of areas, from the cities we inhabit, through our healthcare systems, to how we communicate, pay for things, travel and heat our homes and offices.

Looking at our Building better cities theme first, increasing urbanisation looks set to continue, with more than two-thirds of the global population likely to be city dwellers by the early 2040s. Current cities emit 50% to 60% of greenhouse gases and will therefore have to invest in retrofitting to mitigate environmental impacts. Cities at their best enable a high quality of life with low impacts but this requires infrastructure investment, community planning, water management and efficient mass transport, with thermally efficient buildings essential.

Healthcare is a huge part of a more sustainable future, as people need to be around to enjoy a better world. Looking beyond the pandemic, our view is that we will see significant advances across areas such as gene editing and DNA sequencing, and these are revolutionising how we think about treatment. The traditional model has a large element of trial and error, with people seeking help when they feel ill and hoping whatever drug or procedure prescribed is effective – but this intervention often proves too late. We are moving towards a more personalised system where we can understand how someone’s genetic make-up leaves them vulnerable to diseases and potentially correct this, paving the way for early diagnostics and pre-emptive treatment.

Carbon emissions remain the key ‘sustainable’ goal over the coming years, with a range of net zero targets in place. By 2041, our hope is that the electricity we consume will primarily come from renewable sources and be delivered through a hugely upgraded and more intelligent grid that includes demand-side management. Many things that currently consume fossil fuels will have switched, such as electric vehicles and heat pumps to heat and cool buildings.

Electric cars should be 2041’s dominant form of passenger vehicles, and the combustion engine is likely to be an antique as quiet, clean cities become the norm. Cars will be charged from solar panels connected to houses and battery technology so developed that refuelling is a thing of the past. We anticipate autonomous vehicles as the norm for deliveries of food and parcels; while driving your own car is unlikely to be fully autonomous, safety systems should take control of braking and moving lanes/turning.

In terms of other lifestyle changes, the digital economy is increasingly central to a properly functioning global economy and this will continue. Digital technologies enhance the productivity and reliability of a range of sectors and improve quality of life through positive impacts in areas including health and education. We predict ongoing shifts in the future of networking, systems, applications and services. While the internet will continue to play a vital role in how we communicate, artificial intelligence could personalise our experiences within platforms and quantum technologies and computing make networks faster and more available.

As for finances, despite the current furor around Bitcoin, we would expect most governments to have their own cryptocurrency by 2041 and these will be assimilated into everyday transactions. Commoditisation of mainstream banks will continue with technology-first businesses eating into their profits, and physical cash will be a thing of the past. Everyone, regardless of socioeconomic status or geography, should have access to affordable financial services, with a cashless payment and savings system fostering greater financial inclusion.

Finally, events of the last year have highlighted the importance of physical and mental health and we expect these to become integral parts of everyday life, supported by employers and governments. We hope to see gyms and exercise studios on most high streets, part of our offices and homes, and 50% of the UK population either a member of one of these or an online fitness community.

As for diets, a stark fact is that if cattle were a country (with this ‘Republic of Cattle’ a combination of the beef and dairy industries), it would be the third largest global CO2 emitter. We therefore believe alternative and plant-based proteins will account for over half of protein sold, taking market share due to the taste, texture, health and environmental benefits.

Looking to the next 20 years, we see a pressing need to be just as challenging and radical in our thinking as we were in 2001 and expect this to involve investing in many of the innovations highlighted in this article to make the world of 2041 cleaner, healthier and safer, as well as fairer.

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Key Risks 
 
Past performance is not a guide to future performance. The value of an investment and the income generated from it can fall as well as rise and is not guaranteed. You may get back less than you originally invested. The issue of units/shares in Liontrust Funds may be subject to an initial charge, which will have an impact on the realisable value of the investment, particularly in the short term. Investments should always be considered as long term.
 
Some of the Funds managed by the Sustainable Future team involve foreign currencies and may be subject to fluctuations in value due to movements in exchange rates. Investment in Funds managed by the Sustainable Future team involves foreign currencies and may be subject to fluctuations in value due to movements in exchange rates. The value of fixed income securities will fall if the issuer is unable to repay its debt or has its credit rating reduced. Generally, the higher the perceived credit risk of the issuer, the higher the rate of interest. Some Funds may invest in derivatives. The use of derivatives may create leverage or gearing. A relatively small movement in the value of a derivative's underlying investment may have a larger impact, positive or negative, on the value of a fund than if the underlying investment was held instead.

 

Disclaimer
 
This is a marketing communication. Before making an investment, you should read the relevant Prospectus and the Key Investor Information Document (KIID), which provide full product details including investment charges and risks. These documents can be obtained, free of charge, from www.liontrust.co.uk or direct from Liontrust. Always research your own investments. If you are not a professional investor please consult a regulated financial adviser regarding the suitability of such an investment for you and your personal circumstances. 
 
This should not be construed as advice for investment in any product or security mentioned, an offer to buy or sell units/shares of Funds mentioned, or a solicitation to purchase securities in any company or investment product. Examples of stocks are provided for general information only to demonstrate our investment philosophy. The investment being promoted is for units in a fund, not directly in the underlying assets. It contains information and analysis that is believed to be accurate at the time of publication, but is subject to change without notice. Whilst care has been taken in compiling the content of this document, no representation or warranty, express or implied, is made by Liontrust as to its accuracy or completeness, including for external sources (which may have been used) which have not been verified. It should not be copied, forwarded, reproduced, divulged or otherwise distributed in any form whether by way of fax, email, oral or otherwise, in whole or in part without the express and prior written consent of Liontrust. Always research your own investments and if you are not a professional investor please consult a regulated financial adviser regarding the suitability of such an investment for you and your personal circumstances. 
Peter Michaelis
Peter Michaelis
Peter Michaelis joined Liontrust in April 2017 as part of the acquisition of ATI, where he was Head of Investment. Peter has been managing Sustainable Investment funds since 2001 when he was promoted to lead Portfolio Manager at Aviva Investors.

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