Investment managers and analysts at Rathbones identified four key sectors which are vulnerable to disruption by new technology products in the coming years – personalised medicine, automation and labour markets, alternative energy, and blockchain.
Chief investment officer Julian Chillingworth said it was “imperative” investors understood that any feel-good story surrounding a new product in one of these sectors did not necessarily guarantee a successful investment.
“(Investing) isn’t about airy futurology-style projections,” he said. “As investors, it’s imperative we understand how even for those companies at the forefront of technological change, investment success is not guaranteed,” he said.
He added: “The problem is that even after the dotcom crash of 2000, the ability to value a company properly remains superseded by the desire to re-imagine a future.
“The graveyard is littered with those corporate corpses that went bust before their technologies reached critical mass. Simply ‘buying the story’ isn’t enough.”
Personalised medicine is expected to severely disrupt the pharmaceuticals sector over the next five years, Rathbones’ head of collectives Mona Shah, said, with sales predicted to rise to $178bn by 2022.
In the alternative energy space, companies making or supplying materials for batteries, wind turbines and solar cells may on the face of it seem like a safe bet, but Rathbones head of equity research Sanjiv Tumkur said sharp price falls in an overcrowded market sees many companies fold.