Investors who fail to look outside mature industries will find themselves saddled with a stagnant portfolio, says Hyperion Asset Management.
Hyperion Asset management Australian equities managing director Tim Samway said investors need to take a good look at their current equity portfolio and ask themselves whether the companies they have invested in will still be relevant five years down the track.
“Disruptive technologies are shaping our future and investors who don’t look outside mature industries for future growth will find themselves saddled with a stagnant portfolio,” Mr Samway said.
“Long-term investors should be thinking about growth over the next five to ten years, not the next five to ten months. This can mean foregoing the familiar and well-understood in favour of new business models.
“The harsh reality is that the drivers of success for many Australian companies are changing. Many mature industries with capital intensive business models lack the agility – or the courage and foresight – to adapt to the changing world,” he said.
Mr Samway added that while looking to these sorts of companies is important, it presents the “conundrum” for trying to identify which “disruptors” are likely to be there for the long haul.
“For these investors, embracing the new can feel like succumbing to fads and short-termism,” he said.
“Accepting the necessity of broadening horizons to industries and technologies they don’t fully understand is one thing, but picking long-term winners can be challenging because disruption in and of itself doesn’t guarantee success.
“I would warn investors not to pay the ‘hype premium’, and be cautious of ambitious forecasts made before new technologies have reached critical mass consumption,” Mr Samway said.
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