Is it time to look beyond safe havens like tech for sustainable gains?


Kris Walesby

High gold price and the growing number of coronavirus cases globally could give investors ‘cause to pause’ and review investments options in what many are calling the new normal, according to ETF Securities CEO Kris Walesby.

“Tech stocks have been strong for some time now, with the Nasdaq up 15% this year whilst the Dow is slightly down for the same period.

“The question I encounter in many investment forums, formal and informal is: ‘what other sectors could offer growth in the current environment?’. Given the likely increasing length of the current COVID-19 malaise globally and the diminishing prospects of a V shaped recovery, there are several sectors that warrant serious consideration.”

“Precious metals continue to hold appeal as a hedge against market volatility. Gold pushed through the all-time high mark recently and is likely to maintain value for some time due to quantitative easing programs across the globe and ongoing risks from COVID-19.

“Silver has traditionally followed gold closely and may be set for market interest as investors look for alternatives to gold. Other resources also continue to be in demand, for example, iron ore reached 12-month spot price highs in recent times and there has been recovery in oil prices.

“The healthcare sector, particularly biotechnology, has benefited during the COVID-19 pandemic. While investors have focused on those companies working on COVID-19 vaccine exploration, there are still opportunities through companies covering everyday needs, such as vitamin or painkiller manufacturers, to those covering serious diseases and illnesses, for example, immunotherapy treatments or medical equipment like ventilators.

“Consumer staples companies can assist with stability during the ongoing COVID-19 situation. For example, consumers continue to need and purchase groceries so companies like Coles and Woolworths are able to continue operations largely unaffected. They are also classified as essential businesses even in the more extreme levels of lockdown.

“Similarly, investors could selectively look at infrastructure companies, such as energy providers, as a buffer against volatility. In the current situation, many individuals have seen their reliance on essential infrastructure, such as for energy, water or internet, increase as they spend more time at home.

“Another way to look at energy is the renewable energy and electric vehicles sector, also a growing market and becoming increasingly accessible and affordable. Battery technology is central to this growth and also established technology with continued innovation. So, investors may consider this as a long-term growth-oriented investment in environmental sustainability,” adds Walesby.

“Investors can invest in this theme via ACDC, Australia’s first ETF to provide exposure to the energy storage and production megatrend. It can be used as a thematic growth exposure or a tactical tilt towards emerging technologies in the industrials and materials sectors,” says Walesby.

“Of course, at some point the ‘pandemic sector sufferers’ – the stocks that lose the most during the pandemic – such as travel, leisure, oil, personal services, banks, real estate will look attractive, however we don’t think we are there yet,” said Walesby.

ETF Securities provides investors who wish to invest in diverse sectors with a convenient, transparent and simple investment avenue via specialised ETFs.

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