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5 top investment themes for the next decade

by Janessa Lee

In the world of investing, it’s important to take a long-term perspective rather than focusing solely on the immediate. This is why “time in the market” is a favorite saying at The Motley Fool. Looking ahead to the next decade, there are several investment themes that show promise for significant returns.

One such theme is agricultural evolution. The agricultural sector plays a crucial role in sustaining the global population, but it is facing numerous challenges. Issues such as methane emissions from cattle, crop failure due to volatile weather, and excessive water consumption need urgent solutions. Fortunately, new businesses are emerging with potential solutions, utilizing plant-based proteins, genetic seed modification, vertical farming, drone mapping, and laser technology to increase yield while minimizing environmental impact. Investing in companies like Trimble, AppHarvest, and Beyond Meat offers opportunities for growth in this sector, though the level of risk is still high due to fragmentation.

Another investment theme to consider is base metal demand. The drive for cleaner forms of energy, such as electric vehicles and wind turbines, relies heavily on base metals like copper and nickel. However, underinvestment in mining projects has led to a shortage in viable new sources. This could lead to supply issues and, subsequently, price increases. Established companies like Rio Tinto could benefit from this trend, while investing in a fund like the Blackrock World Mining Trust provides diversification across the sector.

Digital transformation is another theme with significant potential. Organizations are increasingly using technology to enhance productivity, streamline processes, and improve customer experiences. Investing in companies that specialize in helping organizations upgrade their IT infrastructure, like Kainos and Softcat, or companies that provide software solutions for efficiency, like Sage, can be profitable. Additionally, cloud computing companies like Amazon, Microsoft, and Alphabet are gaining popularity as businesses migrate to the cloud for increased agility. While the risk of a recession slowing corporate spending on new technology exists, the global digital transformation market is projected to grow significantly in the next decade.

The energy transition towards a greener world is an investment theme that cannot be ignored. Governments and institutions worldwide have been promoting cleaner energy sources, and businesses are factoring environmental implications into their models. This presents opportunities to invest in electric vehicle manufacturers like Tesla, renewable energy stocks, and even traditional oil and gas companies like BP as they prioritize their commitment to transition. The energy transition is expected to continue in the coming years and prove to be a fruitful investment theme.

Finally, the decarbonization of the planet is a massive investment theme for the next decade. Consensus opinion suggests that reaching net-zero emissions by 2050 is necessary, driving the demand for renewable energy sources. Investing in renewable energy producers, like companies operating solar and wind farms, or even traditional fossil fuel companies redirecting profits into clean energy, could yield returns. Opportunities in this theme can also be found in funds like the iShares Global Clean Energy ETF, which tracks global companies focused on renewable energy.

While these investment themes offer potential for significant returns, it’s important to consider the associated risks, such as market volatility and the potential impact of economic downturns. Nevertheless, with a long-term perspective, these investment themes could prove fruitful in the next decade and beyond.

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