Macro trends will continue to have a large impact on the global investment climate and superannuation funds should consider adopting a thematic approach to benefit from these trends.
Funds can capture the returns from these trends through building an overlay on their core investment strategy, consultancy firm Towers Watson argued in a new paper, titled: Capturing Long-Term Themes.
"Investing will continue to be shaped by the mega trends that originate in almost every area of our world: economics, politics, demographics and technology," Towers Watson head of strategy in Australia Tim Unger said.
"These global mega trends provide opportunities for investors who can take a long-term view of the possible effects of these trends, and identify the beneficiaries of the changes that result."
But capturing the returns generated by these macro factor themes was still a challenge, Unger said.
"Successful thematic investment requires a lot of work on the part of funds to find the right exposures and managers, and to understand the risk layer being added," he said.
"Thematic investment is not a new asset class, in fact it cuts across the portfolio: it is a strategy that can benefit from both alternative investments and/or alternative return drivers," Unger said.
"It can be used to exploit opportunities and to mitigate potential risk. But funds should ensure that they adopt a diversified approach to themes," he said.
