Investing in Digital Infrastructure?
By Astra Group
The pandemic has been a catalyst for certain growing trends and consumer habits which are, in turn, driving up demands for digital infrastructure to support the growing presence of the online industry. Alongside this, the surge in working-from-home as a result of the pandemic has increased the demand for digital infrastructure such as improvements in networks, manufacturing of equipment such as semiconductors and chips as well as additional security and upgrades of existing data centres.
The way people work, seems to have changed the most due to the pandemic, and is a trend which many companies have said will continue (work-from-home), with a Gartner CEO survey saying that 74% of companies plan to shift to remote work after the covid-19 pandemic. Although this figure is widely debated, it can be said that at the very least there looks to be a change to the way people use offices. It is likely that people will work from home at least one day a week in a majority of professions after the pandemic has ceased. This brings with it a growing need for improved digital infrastructure outside the office.
74% of companies plan to shift to remote work
With the rise of ‘Tech’ during the pandemic, it is important to therefore have exposure to the rising trend which is shaping the future of everything we do in more ways that one.
At Astra we feel it is important that clients are able to profit off of these growing trends in technology. Through investments
in funds which have limited exposure to companies which provide the digital infrastructure to enable the use of home entertainment systems or the infrastructure which supports your internet banking services for example.
Instead of solely investing in the main FAANG companies, it is also important to have exposure to the companies which benefit off of the growth of the FANNGs, as this enables clients to have limited exposure to technology stocks trading at astronomical valuations and thus reducing client risk. This approach to investing known as ‘pick-and-shovel’ investing is, for example, investing in Panasonic Corp which provides the batteries and IP used in Tesla EVs thereby limiting client exposure to potential bubbles such as Tesla stock, but allowing them to benefit off of a rising trend, which is the sustainable production of vehicles.
We feel that this enables clients to benefit off of the profits generated by these companies, as well as limiting risks of clients’ portfolios through not having too much exposure to overvalued tech stocks.
Technology is being used more and more to support daily activities which everyone benefits off of. From an alarm in the morning to an audiobook at night, these services and functional use systems are supported through chips and software which enables these simple processes to happen.
As technology becomes more widespread and engrained into more everyday life activities, the growing need for these digital infrastructure companies will be apparent, and thus exposure to the digital infrastructure industry for our clients is essential going forward.
As mentioned above, digital infrastructure is used in supporting ESG and sustainability goals such as smart buildings used to reduce Co2 emissions alongside the production of batteries for EVs, and thus clients can have exposure to a growing industry whilst also investing sustainably, generating both impact and profits.
If you would like more clarity, confidence and control in investing, please reach out to us for a quick online chat and we'd be happy to help you take the first steps on your journey to a brighter financial future.
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