Investing in a connected world
I’ve managed to resist the temptation so far, although when it comes to gadgets my willpower is notoriously poor.
On Saturday morning I arrived to setup the course at Cranleigh parkrun to find a chap piloting his quadcopter above the field.
All thoughts of course setup immediately went on hold for a discussion about features, optional extras and prices. It’s another gadget I must now resist the temptation to add to my collection.
Clearly buying boys toys like these is not an investment. There are however investment opportunities to consider in an increasingly connected world.
It was interesting to read a briefing note for advisers today on this subject from Steve Davies, manager of the Jupiter UK Growth Fund.
Davies believes that owning the companies which build, sell, connect and provide content for devices which are connected to the Internet offers a promising route for investors looking to capitalise on this long-term trend.
To illustrate how connected we are becoming, Davies cites research which says we check out smartphones between 110-150 times a day. In my case, there’s a good chance that’s an underestimate.
If we accept that the sales and use of connected devices is going to continue to grow, the question from an investment perspective is how to best capitalise on that trend.
Steve Davies starts with investing in the devices themselves, explaining he has been invested in Apple since 2010, but also Dixons Carphone group, as the largest UK retailer of mobile phones.
There are also the networks which need to be in place to connect the devices.
Davies has invested in providers of domestic and B2B services (Sky, TalkTalk and CityFibre, the latter a small but fast-growing business that is developing ultra-fast fibre networks in a number of UK cities.
He has also invested in more specialised areas. For example, Inmarsat operates a fleet of satellites that allow merchant shipping, airlines and other industries that operate in remote areas to stay connected beyond the range of terrestrial networks.
In addition, there is content to consider. Without content, devices and their connectivity would be fairly limited.
He cites Experian as an example of this; the company is in his view a market leader in the essential service of facilitating online credit checks – in addition, it also serves individuals, who can now more easily check their own credit rating online and protect against identity theft.
In all of this, Davies points out it is important to remember technology moves extremely quickly.
The Apple iPhone was only launched eight years ago, and already that product is on its sixth major iteration. As a result, he expects the connected world to provide a whole variety of companies with exciting growth opportunities.
As I continue to resist the lure of the Apple Watch and DJI Phantom 3 (my birthday is however coming up next month, if anyone is feeling generous) it is interesting to consider some of these investing themes and consider how investors might best access them.