Everyone is looking forward to creating wealth through new trends, themes and ideas. We’re just one month away from the close of the year 2021 and though it’s that time, we look to the future for more avenues to create wealth.
This ponders the question, “What does the future hold for Investing?”
Let us look at a few themes from Technology and IPOs to ESG as factors that can enable us to create wealth, in the long run, moving forward.
As always, Neil Bahal from Negen Capital was kind enough to share his thoughts.
“The Future is here and it is here at maximum velocity.” says Neil.
“India is on its way to becoming the world's 5th largest stock market by 2024.
But what is important to digest is that this will be led by Tech companies as time progresses. By 2035, it is likely that the Nifty will comprise purely of Technology companies.
*(We will not have any traditional banks, steel, cement, or a power company in the Nifty).”
Neil goes on to talk about the various reasons why the technology would be a key driving force for investing in the future & since Negen Capital smallcase bases its investment strategies on data, some data points will be helpful as to why Tech companies will lead us into the future.
- > Rural India saw a 400% rise in 'Data Consumption' between 2020 and 2021.
*Rural India has finally been connected with commerce and is the driving force in the growth of the Internet, 4G, UPI, Music Streaming and most importantly - E-Commerce.
- > Indians are now spending 4 hours per day on their phones.
India is ranked 4th in terms of 'spending time on the phone per day.
*This is an astonishing stat. All these daily hours on the phone are being spent on Gaming, Music Streaming, E-Commerce, Video commerce and browsing Social Media.
Companies related to the 'Internet' are seeing exponential growth as a result
- > There was a 35% year over year rise in 'Social Media Influencers' in 2020-21.
*Social media influencers play the most important role in E-Commerce. And the growth in 'Influencers' definitely is suggesting the incredible tailwinds India's E-Commerce sector is enjoying.
This will structurally remain for the next 10-15 years easily.
Hence, at Negen Capital, we have designed India's first investment strategy which is purely focused on 'Technology and Special Situations'.
Currently, the strategy is +82% in 10 months since launch and we are confident of our vision for India's future.”
Negen Capital is offering a special discount code: NEGEN20 that is available for the first 100 users.
Now let us have a look at ESG as an avenue for investing into the future.
Abhishek Banerjee, Founder of Lotusdew, believes that ESG is a sector where the future of investment lies.Malls-past & Future
“Future is created in the past. For example, some of the science today was science fiction yesterday. In fact, some of the new-age business models are the digitization of past models. The ability to attract footfall has always been a proven business model. Earlier they were brick and mortar malls like the famous malls of Gurgaon and Delhi when it all started in India and now its digital malls like Flipkart, Amazon, Smallcase, Nykaa, Zomato to name a few.
Sustainable Cash Flows and Book values
At the forefront is what we think is ESG. This is just not a good to have but a need to have. Companies that produce fossil fuels like petrochemicals, coal, natural gas are usually valued on audited reserves they have acquired. There is an ecosystem around such companies like consulting companies whose core business is to produce qualified reports which are used to establish book value of these businesses, suppliers to these companies in terms of equipment and customers who consume the output like power purchase agreements. Unless we look through the lenses of ESG we won't be able to see that some of this book value may never be monetizable and on the other hand, we might underestimate the current managements' effort to steer away their company towards sustainable cash flows from clean energy at the cost of losing profitability in the short term.
We look for such opportunities within our ESG smallcase. Our core philosophy is sustainability
and this we feel is extremely important in the context of carbon neutrality India has committed to by 2070.
Not only the environment but other factors too…
Sustainability in our mind is not limited to environmental cleanliness but general business hygiene. It's the resolve and grit of the management to bite through short term to build a long term scalable business. A good board often serves as the moral compass of a company and hence in our listed VC strategy we make this the core of our offering.
We are able to do this by analysing data like exchange disclosures, MCA information, Employer rankings to name a few to build a board score that helps us narrow a universe of 2500 companies into distilled advice for our customers. We look for indicators using NLP AI techniques like tax litigation, management analysis and risk disclosures in annual reports etc. We are able to catalogue the companies at scale using AI but these are principles that can be applied by individuals who have the time to read and apply these techniques.
But if you are busy, we are here to help with our research in Listed Venture Capital and Nanocap Champs smallcase.” explains Abhishek in confidence.
Now that we have opinions from two of the best smallcase managers, Neil Bahal and Abhishek Banerjee, who believe in Technology and ESG themes respectively for investments that could reap rewards into the future, it's time to dive into the future by investing in the future.
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