BlackRock’s 2023 thematic outlook report, Time to Rethink Growth, finds Jay Jacobs, US head of Thematics and Active Equity ETFs, commenting that in 2023, the potential for performance dispersion among equities could mean it finally pays for growth and tech equity investors to consider getting selective again.
Jacobs writes: “Amidst a challenging economic outlook, from rates to potential recession, there are themes that may be poised to shine within growth and within technology. This means getting more precise about where to find opportunities that can navigate challenging near-term economic conditions, while seeking to capture exposure to long-term structural Megatrends.”
Key themes investors should be paying attention to, Jacobs believes, include:
Dispersion returns: “We believe dispersion across growth equities could return to historically higher levels, which means investors may want to be more selective to identify potential winners from losers than in years past.”
Fiscal policy could provide ballast, he writes: “Trillions of new dollars in fiscal spending – ranging from the U.S. Inflation Reduction Act (IRA) to the U.S. Infrastructure Investment and Jobs Act (IIJA) to the European Union’s Global Gateway – should provide meaningful support specifically for clean energy, electric vehicles (EVs) and infrastructure in 2023 and beyond. How to play it: IDRV, ICLN, IFRA.”
Healthcare innovation continues, Jacobs says: “While investors have punished medical innovation of late, relative inelastic demand for medicine coupled with potential breakthroughs in genomics, immunology and neurology, may mean the space is being underestimated given recent challenged performance. How to play it: BMED, IDNA, IBRN.”
Tech staples could separate from the pack: Tech is not a monolith, Jacobs writes. “We believe cybersecurity and robotics have the potential to buck the economic cycle given cybersecurity has moved from niche to necessity and robots are mission-critical in fighting supply chain challenges, labour shortages and inflation. How to play it: IHAK, IRBO, BTEK, IETC, SOXX.
