Insurance Technology

Insurance companies often face fierce competition with each other for many of the same customers. In the U.S., the car insurance market, for example, is dominated by a handful of major players. The 10 largest companies in the industry control approximately 72% of the market, according to Value Penguin by Lending Tree

The winners and losers of each year are determined by which companies pick up more market share. In 2019, Progressive notably gained more than a percentage point of the market share in the auto insurance industry. 

Insurance, however competitive, is an industry that seems entrenched in archaic processes. 

This might not be the case for long, though – the insurance industry is expected to change dramatically in the next five to ten years, according to McKinsey. The firm expects the industry to shift as customer expectations and technology rapidly evolve.

Insurance technology i.e. insurtech, or the innovative use of technology in the insurance industry, seeks to bring greater value to customers and companies. And it’s not going unnoticed. According to PricewaterhouseCoopers, “insurtech has become a powerful driver of change in the insurance industry.”

In fact, the number one risk facing the global insurance industry is technology modernization, according to PwC. To remain competitive, companies need to keep their tech improving and their processes modernizing. 

What is insurance technology?

Insurtech “is a term used to refer to technology designed to enhance the operations of insurance firms and the insurance industry as a whole.” Insurance technologies include big data, artificial intelligence, consumer wearables, and smartphone apps, which are ushering out the old processes of insurance for new ones. 

These new technologies are extremely valuable to insurance companies; insurtech companies offer pay-per-use and an emphasis on loss prevention and restorative services, according to PwC. 

According to Duck Creek Technologies, there are 8 top technology trends in insurance. 

Predictive analytics: Predictive analytics analyzes data to make predictions about the future. In insurance, technology is most used for: (1) pricing and product optimization; (2) claims prediction and timely resolution; (3) behavioral intelligence and analytics to predict new customer risk and fraud; (4) uncovering agent fraud and policy manipulation; (5) optimizing user experience through dynamic engagement, and (6) big data analysis. 

Artificial Intelligence (AI): In the insurance industry, like in many industries, artificial intelligence is helping companies to personalize experiences and make business processes more accurate and expedited.

Machine learning: Machine learning is the ability of a program to learn through a variety of algorithms. Machine learning is helping to improve and even automate the claims process by utilizing pre-programmed analysis. 

Internet of Things (IoT): Sharing data from smart devices can save customers money on policies. In 2019, 34.8 million homes in the U.S. were considered smart homes. Because smart home features increase safety and decrease energy usage, insurance companies can use them to better assess risk and reduce costs for consumers. 

Data: In the insurance industry, social media is more than a tool for marketing. Not only can social media analytics be used to increase sales, it can also be used to improve loss ratios

Telematics: Do you plug a device that monitors your car’s use and speed to get a better price? Telematics are like a “a wearable device for your car.” Telematics are thought to help both insurance companies and insurance customers by encouraging better driving habits, lowering claims costs for insurance, and making carrier to customer relationships more proactive than reactive. 

Chatbots: Chatbots are a growing phenomenon. Insurance companies can use bots to help customers apply for insurance or file a claim, freeing up employees to help with more complicated needs. For example, Geico offers Kate, a virtual assistant that can quickly help customers with information like the current balance on an auto insurance policy, the date of a next payment, or by providing access to policy documents 24/7. 

Drones: While it might be easier to imagine drones dropping off packages for customers than administering insurance, drones are gaining a role in insurance. For example, how does a virtual visit to assess risk or damage sound in the COVID-19 pandemic? That’s what programs like the Remote Visit application offered by FM Global are doing. Another example, Farmers’ Kespry drone program, was launched in 2017 to review roof damage following weather events, leading to faster assessment turnaround and increased safety for claims reviewers.  

Why invest in insurance technology?

The insurance industry is ripe for innovations of all kinds. 

According to PwC, Global insurance technology investments in 2018 totaled $4.15 billion.   2020 expedited the adoption of technology in the insurance industry. This is no surprise considering that insurtech facilitates things like virtual sales, virtual claims interactions and expense reduction, according to Deloitte.

Despite the pandemic-induced economic uncertainty, “insurtech industry investments in the aggregate appear to be as robust as ever,” according to Deloitte. $2.2 billion in investments in insurtech were recorded in the first half of 2020 alone. 

It’s not just disruptors to the industry to be on the lookout for. Legacy carriers that successfully adopt technology internally will also benefit in the long term. 

According to Sam Friedman, insurance research leader at the Deloitte Center for Financial Services in an interview with Insurance Business America: “I don’t see a behemoth insurtech out there that’s going to essentially end the insurance business as we know it, and take over massive amounts of market share….Where insurtech is having a huge impact is in helping insurers become better at what they do.”

Magnifi is changing the way we shop for investments, with the world’s first semantic search engine for finance that helps users discover, compare and buy investment products such as ETFs, mutual funds and stocks. Try it for yourself today. 

This blog is sponsored by Magnifi. The information and data are as of the publish date unless otherwise noted and subject to change. This material is provided for informational purposes only and should not be construed as individualized investment advice or an offer or solicitation to buy or sell securities tailored to your needs. This information covers investment and market activity, industry or sector trends, or other broad-based economic or market conditions and should not be construed as investment research or advice. Investors are urged to consult with their financial advisors before buying or selling any securities. Although certain information has been obtained from sources believed to be reliable, we do not guarantee its accuracy, completeness or fairness. Past performance is no guarantee of future results. This content may not be reproduced or distributed to any person in whole or in part without the prior written consent of Magnifi. [As a technology company, Magnifi provides access to tools and will be compensated for providing such access. Magnifi does not provide broker-dealer, custodian, investment advice or related investment services.]


Wearables

How many steps have you gotten today? For many of us, that question might cause us to automatically glance at our wrists. 

Smart watches, fitness trackers, high-tech clothing, glasses, and more— wearables have gone from a futuristic idea for health and wellness to the new normal. 

While the big names including FitBit, Apple Watch, and Samsung lead the way, they aren’t the only players in the market. 

WHOOP, for example, is a Boston-based digital fitness company that closed a $100 million Series E financing round in late October. Whoop, a sponsor of many athletes across sports, is designed to help athletes determine whether they need to rest or push themselves. The company is now valued at $1.2 billion, giving it unicorn status. 

From sleep monitoring to calorie tracking and beyond, more and more people are opting to wear devices that collect health data and metrics and connect to each other. 

These devices are advancing fast from simply counting steps. Apple’s Apple Watch, for example, enables users to perform an electrocardiogram heart reading. Matrix PowerWatch Series 2 can charge itself from solar power or body heat, instead of electricity. 

Here’s what investors need to know about the current state of the wearable market and what its potential looks like. 

What are wearables?

While wearables might seem new, they aren’t even a 21st century idea. 

It’s thought that Leonardo da Vinci developed the first pedometer in the 15th century as a means to track the distance a soldier walked. Later, in the 18th century, Thomas Jefferson created the first pedometer in the US and introduced it to the American public. Beyond pedometers, most believe that a tiny abacus worn as a ring in the 17th century in China is the world’s oldest smartwatch of sorts.  

These days, modern wearable technology quantifies human movement and records physiological metrics. Diagnostic wearable medical devices “monitor, control, and track an individual’s vital signs at regular intervals.” Different wearables measure different physiological information, including blood pressure, body temperature, respiratory rate, glucose quantity, heart rate, blood oxygen saturation, heart rate, muscle activity, or calories burned during exercise. These devices typically work autonomously and come in a variety of forms. 

When did wearables get so popular, again? FitBit launched its first device in 2009, a wireless device that clipped onto clothing. The first model wasn’t smartphone connected. And while 2012 models linked directly to smartphones, it wasn’t until 2013 that FitBit released a wrist worn tracker. In 2015, FitBit sold 21.4 million devices and in 2016, it sold 22.3 million devices. 

That’s not to mention smartwatches, which are technically wearable computers. Apple, Samsung, and FitBit dominate the smartwatch market today, which is anticipated to reach a market value of $130.55 billion by 2024 from $48.14 billion in 2018, indicating significant growth. 

Wearables are getting smarter and smaller. Smart jewelry, as of 2020, includes the smart ring by OURA.  A company named Joule is even working on a smart earing backing. Larger pieces have advantages, however. Smart clothing, for example, covers a larger area of the body and so can detect even more information. For example, Samsung has a patent for a shirt that can detect breathing issues and lung disease. 

Another type of wearable, called “hearables,” is on the rise too. 

According to Scotland’s National Health Service (NHS), “devices that are primarily intended to allow streaming of media to the device but that also offer a hearing enhancing function not dissimilar to a hearing aid.” The hearables market is estimated to grow to a $93 billion dollar market by 2026.

But wearables aren’t just… worn. 

For instance, the first ingestible digital health feedback system, developed by Proteus Digital Health, was approved by the FDA in 2012. Wearables come in many shapes and sizes, and have an increasing number of uses and potential uses (and users). 

Why invest in wearables?

In a world dealing with obesity and other chronic health conditions, wearables have the potential to shift medicine from the intervention stage to prevention. 

According to the Centers for Disease Control and Prevention (CDC), 6 in 10 adults in the US have a chronic disease, such as heart disease, cancer, chronic lung disease, stroke, Alzheimer’s disease, diabetes, or chronic kidney disease. Lifestyle choices that influence chronic disease include tobacco use, poor nutrition, lack of physical activity, and excessive alcohol use. 

That’s where wearables come in. By tracking personal habits, the user is able to make changes before things get out of hand.

While wearables are wildly popular, they have yet to tap the potential in the world of remote medicine. In fact, although remote monitoring tools have enormous potential for patients with chronic illnesses, they remain vastly underused. Case in point: “ninety-one percent of the patients who use wearables identify as an athlete, compared to the only 21 percent who said they have a chronic illness.” Nonetheless, wearable technology is a promising tool in the fight against chronic disease.

Wearables offer a myriad of potential health solutions, from monitoring key health indicators to minimizing touch on shared surfaces. Wearables can open doors in office buildings, for example. Wearables can also monitor and flag changes in body temperature. Over time, wearables can determine trends and track performance, offering increasingly personalized feedback and training opportunities.

Increased adoption of wearable devices and market potential in medicine make wearables a worthy investment. 

FitBit has close to 500,000 subscribers to FitBit Premium, with the pandemic strengthening business as consumers seek ways to stay healthier from home. As part of its growth plan, FitBit plans to continue to promote subscriptions that foster engagement, as well as develop telemedicine potential. For example, the company may promote add-on devices such as a connected thermometer or an otoscope that can lessen the need for in-person doctor visits.  It’s also conducting research to determine how effective the technology can be in detecting COVID-19 early. 

Apple also has its eye on health, specifically monitoring key indicators in senior citizens.

The wearable market isn’t expected to slow down anytime soon. While wearables have shown significant growth thus far, they have loads of potential, especially as it relates to increasing integration with healthcare in a world riddled with chronic disease and reeling from a pandemic. 

Magnifi is changing the way we shop for investments, with the world’s first semantic search engine for finance that helps users discover, compare and buy investment products such as ETFs, mutual funds and stocks. Try it for yourself today. 

This blog is sponsored by Magnifi. The information and data are as of the publish date unless otherwise noted and subject to change. This material is provided for informational purposes only and should not be construed as individualized investment advice or an offer or solicitation to buy or sell securities tailored to your needs. This information covers investment and market activity, industry or sector trends, or other broad-based economic or market conditions and should not be construed as investment research or advice. Investors are urged to consult with their financial advisors before buying or selling any securities. Although certain information has been obtained from sources believed to be reliable, we do not guarantee its accuracy, completeness or fairness. Past performance is no guarantee of future results. This content may not be reproduced or distributed to any person in whole or in part without the prior written consent of Magnifi. [As a technology company, Magnifi provides access to tools and will be compensated for providing such access. Magnifi does not provide broker-dealer, custodian, investment advice or related investment services.]


China

 

China, the first country to deal with COVID-19, has also been the first to see some recovery, with economic indicators mostly back to pre-pandemic levels as of October. 

But the rest of the world has not been so successful.

The financial disruption in China and around the world has made asset prices more appealing. In March, U.S. stocks plunged to three-year lows. Even as COVID raged, however, Chinese stocks remained strong and are coming back even stronger. According to fund flow data from EPFR, “allocation to Chinese stocks among more than 800 funds reached nearly a quarter of their nearly $2 trillion in assets under management.”

China’s momentum is being driven by its economic recovery, making the country an interesting diversification play in the midst of all of today’s volatility. Here is what investors need to know.

What is happening in China’s economy?

China’s new economy, according to BlackRock, is technology and innovation driven, consumption and service-focused and more open with a growing, more urbanized middle class. 

Through 2018, China’s GDP growth averaged 9.5%, which the World Bank described as “the fastest sustained expansion by a major economy in history.” The country’s GDP was US$ 14.140 trillion in 2019 and it’s economy grew by 6.1%. Even with the pandemic, Oxford Economics anticipates a similar 6% GDP forecast for 2020.

Part of this growth is due to increased consumer demand, and a significant shift away from export reliance. In 2012, Chinese consumer spending was $3.2 trillion. This rose to $4.7 trillion in 2017. In December 2019 there was an 8% jump in retail sales and 6.9% growth in industrial production, exceeding analyst’s expectations. 

In other words, China is becoming increasingly self-reliant. 

That said, it still has its sights set on exports. China has a strong, well-educated workforce that will power the technology and advanced manufacturing sectors, which will be a core part of its economic growth. 

China’s Made in China 2025 initiative is a ten-year action plan to bolster manufacturing. Key manufacturing sectors include: New information technology, high-end numerically controlled machine tools and robots, aerospace equipment, ocean engineering equipment and high-end vessels, high-end rail transportation equipment, energy-saving cars and new energy cars, electrical equipment, farming machines, new materials, and bio-medicine and high-end medical equipment.

The plan is focused on (1) improving manufacturing innovation, (2) integrating technology and industry, (3) strengthening the industrial base, (4) fostering Chinese brands, (5) enforcing green manufacturing, (6) promoting breakthroughs in ten key sectors, (7) advancing restructuring of the manufacturing sector, (8) promoting service-oriented manufacturing and manufacturing-related service industries, and (9) internationalizing manufacturing.

But manufacturing is just one component of China’s growing economy. 

According to IBIS World, the 10 fastest growing industries in China include: internet services (27.4%), online games at (27.2%), online shopping (22%), optical fiber and cable manufacturing (20.3%), oil and gas drilling support services (8.6%), satellite transmission services (18.5%), alternative-fuel car and automobile manufacturing (17.8%), meat processing (17.3%), energy efficient consultants (17%), and Chinese medicinal herb growing at (16.6%). In other words, the economy is well-diversified. 

Why invest in China?

According to BlackRock, China is an “opportunity too big to ignore.” 

 Despite the fact that the majority of Chinese companies on the Fortune Global 500 are state-owned, many of its economic leaders are privately owned. For example, COVID-19 related buying benefited Alibaba in the form of a 34% growth rate in its e-commerce business year on year for first quarter of 2020. And Tencent reported a 29% increase in revenue year over year, amounting to $16.2 billion during the second quarter of 2020. 

But privately owned companies aren’t the only ones flourishing.

China Life Insurance, for example, has a market capitalization of roughly $100 billion, making it not only the largest insurance company in China, but also one of the largest in the world. 

According to Nasdaq, state-owned China Mobile offers “income and price appreciation potential.” The company is huge, with “188,000 5G base stations put into service throughout more than 50 Chinese cities.” And it has an annual dividend yield of 5.95%. 

This mixture of publicly and privately owned entities uniquely positions China against economic downturns. For example, rather than directing money to citizens and businesses like the U.S. stimulus, it intervened directly in the labor market by increasing employment in state-owned enterprises (SOEs). 

China’s markets are also poised to grow. According to The Financial Times, “the Chinese economy makes up 16% of the world’s GDP and around 14% of the world’s exports, it still only makes up 5% of the world’s equity markets, despite those markets being home to some of the largest companies in the world by market value. The obvious examples are Tencent and Alibaba, companies it is hard to get through the day in China without using.”

Even though China has challenges like the pandemic and US-China trade war, it’s still on a trajectory for long-term growth. That makes it a good investment opportunity now. 

How to invest in China

With such a broad economy, investing in China as a theme isn’t as easy as buying shares in a few companies. Rather, China-focused ETFs and mutual funds allow investors to get in on the entire Chinese economy without having to pick and choose sectors. A search on Magnifi suggests that there are a number of different options available to investors today.


Magnifi is changing the way we shop for investments, with the world’s first semantic search engine for finance that helps users discover, compare and buy investment products such as ETFs, mutual funds and stocks. Try it for yourself today.

This blog is sponsored by Magnifi. The information and data are as of the publish date unless otherwise noted and subject to change. This material is provided for informational purposes only and should not be construed as individualized investment advice or an offer or solicitation to buy or sell securities tailored to your needs. This information covers investment and market activity, industry or sector trends, or other broad-based economic or market conditions and should not be construed as investment research or advice. Investors are urged to consult with their financial advisors before buying or selling any securities. Although certain information has been obtained from sources believed to be reliable, we do not guarantee its accuracy, completeness or fairness. Past performance is no guarantee of future results. This content may not be reproduced or distributed to any person in whole or in part without the prior written consent of Magnifi. [As a technology company, Magnifi provides access to tools and will be compensated for providing such access. Magnifi does not provide broker-dealer, custodian, investment advice or related investment services.]


Diversity

There’s a saying that “teamwork makes the dream work.” In the modern world, a diverse team can be the difference between success and failure. These days, employees, customers, and investors alike know that a talented group of people who advocate for the best ideas really get the job done. Usually, those people don’t all look the same. 

Moreover, there are metrics that prove the merits behind the philosophy. 

According to the Wall Street Journal, in 2019, the 20 most diverse companies had an average annual stock return of 10% over five years, compared to 4.2% for the 20 least-diverse companies surveyed. 

The world in 2020, though, is much different than it was a year ago. 

With the disruptions to day-to-day life and business caused by the COVID-19 pandemic, it can be easy for companies to identify goals like inclusion and diversity (I&D) as more “feel-good” than critical to success. Now more than ever, though, the reality is that I&D is crucial to long-term success. 

“Commitment to I&D can help drive innovation, overcome business challenges and attract and retain top talent,” according to BlackRock. Even more, I&D “are critical for business recovery, resilience, and reimagination” according to McKinsey

There’s no denying that a more challenging world means that companies need more effective teams, which require diversity. 

Here’s why investors should put their money where the I&D is. 

What is inclusion and diversity (I&D)?

Diversity “is any dimension that can be used to differentiate groups and people from one another. In a nutshell, it’s about empowering people by respecting and appreciating what makes them different, in terms of age, gender, ethnicity, religion, disability, sexual orientation, education, and national origin.”

Inclusion “is an organizational effort and practices in which different groups or individuals having different backgrounds are culturally and socially accepted and welcomed, and equally treated.”

And, when you put these two together, it sounds like an ideal place to work. 

Why? No company operates in a vacuum— all operate in a diverse and quickly changing world, with global customer bases.

I&D has impacts for employers and employees alike. According to Allianz Global Investors, “Only if people feel included, will they bring their full selves to work and give their best. Only if people feel they can share their different perspectives, will companies fully unlock their potential to innovate and make the best decisions.” 

There is more than one Inclusion and Diversity index, but one of the most popular is the index developed by Refinitiv. Using 24 metrics across four key pillars, Refinitiv ranks over 7,000 companies around the world, identifying the top 100 publicly traded companies. The index’s ranking is based on corporate pillars including diversity, people development, inclusion, news, and controversies. 

A similar index was launched by Universum in 2019. Universum’s index focuses on recruiting for diversity. According to the index, cultural diversity is more complex than gender, age, and ethnicity. Rather, cultural diversity extends itself to include personality traits, socio-economic backgrounds, nationality, work experience, and education.

Why invest in inclusion and diversity?

Diversity and inclusion efforts foster a dynamic business environment, boosts idea generation, and is an indicator of long-term success, all of which are markers of good investment opportunities. 

I&D is proven to have an impact in practice. For example, inclusion and diversity helps companies to reach a global customer base. According to a study by the Harvard Business Review, “A team with a member who shares a client’s ethnicity is 152% likelier than another team to understand that client.” Beyond that, according to the same study, it’s crucial for innovation leaders to encourage employees to share their ideas.

Moreover, investing in I&D can help companies to achieve higher returns.

McKinsey’s Diversity Matters study examined data (including financial results and the composition of top management) of 366 public companies across a range of industries in Canada, Latin America, the United Kingdom, and the United States. The study found that: (1) “Companies in the top quartile for racial and ethnic diversity are 35 percent more likely to have financial returns above their respective national industry medians” and (2) “Companies in the top quartile for gender diversity are 15 percent more likely to have financial returns above their respective national industry medians.”

Measuring diversity and inclusion in practice has its challenges, but also its benefits.

According to Dr. Rohini Anand, Sodexo Corporation’s senior vice president and global chief diversity officer: “For every $1 it has invested in mentoring, it has seen a return of $19.”

The Fluor Corporation measures I&D in employee productivity and engagement, which translates to company performance resulting in “indirect costs or benefits to the company.” 

At MGM Mirage, I&D is measured in human resources, purchasing, construction, corporate philanthropy, and sales and marketing. It even includes editorial coverage about its I&D as having advertising value. 

As diversity becomes more important than ever before on investment reports, portfolio managers are seeing more and more correlated to positive returns. Investing in companies that value I&D is not only a way to identify companies that have an edge on their competition, it is also a way to embrace and promote this value in the corporate world. 

How to invest in diversity and inclusion

Naturally, with a theme as broad as diversity, investing isn’t as simple as picking a few diverse companies and calling it good. For those investors interested in supporting a broad swath of companies that score highly on I&D, a search on Magnifi suggests that there are a number of ETFs and mutual funds to consider.

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Magnifi is changing the way we shop for investments, with the world’s first semantic search engine for finance that helps users discover, compare and buy investment products such as ETFs, mutual funds and stocks. Try it for yourself today. 

This blog is sponsored by Magnifi. The information and data are as of the publish date unless otherwise noted and subject to change. This material is provided for informational purposes only and should not be construed as individualized investment advice or an offer or solicitation to buy or sell securities tailored to your needs. This information covers investment and market activity, industry or sector trends, or other broad-based economic or market conditions and should not be construed as investment research or advice. Investors are urged to consult with their financial advisors before buying or selling any securities. Although certain information has been obtained from sources believed to be reliable, we do not guarantee its accuracy, completeness or fairness. Past performance is no guarantee of future results. This content may not be reproduced or distributed to any person in whole or in part without the prior written consent of Magnifi. [As a technology company, Magnifi provides access to tools and will be compensated for providing such access. Magnifi does not provide broker-dealer, custodian, investment advice or related investment services.]


Adtech

Advertising in 2020 is way more than a billboard on the side of a highway these days. When it comes to catching consumer eyeballs, it’s personal. 

As consumers, we know it well. We can’t scroll to a news site, or any site for that matter, without a barrage of ads that may or may not be tailored to our interests.  And it’s true— thanks to advertising technology, advertisements are more targeted than ever.  

Adtech is a relatively new industry that has become part of the fabric of the modern world, and it’s only just begun. 

For consumers these days, the constant ads are the price of free, and so mostly, we accept it. After all, we aren’t paying for Google search, for Facebook, or to watch our favorite show on YouTube.

The internet-based services that have become so ingrained in our daily lives learn about us so that they can most successfully serve us ads and use those dollars to provide their services. This is especially true since the coronavirus pandemic shifted so many “in-person” norms to virtual experiences.

It’s a crazy world we live in, and for all of the unknowns, we can rest assured that advertising isn’t going away anytime soon. 

What is adtech?

Advertising technology (or adtech) is driven by what’s called programmatic advertising. If that sounds more like an AI algorithm than a sales team, that’s because it is. 

Programmatic advertising is “the real-time buying and selling of ad inventory through an automated bidding system. Programmatic advertising enables brands or agencies to purchase ad impressions on publisher sites or apps through a sophisticated ecosystem.”

And while we all gasp at how expensive Super Bowl commercials are every year, we don’t always consider how companies try to get in front of their target audience 365 days per year while consumers watch, click, and scroll throughout the day.

Programmatic advertising includes display ads, video ads, social ads, audio ads, native ads, and digital out-of-home ads. It’s at play whether we Google something random or tune into the season finale of our favorite show.

Consumer ad fatigue has simply led to more creative ways to grab interest. For example, native ads appear to be part of the media they appear on, rather than stand out like a pop-up or a banner ad. 

The Economist famously used programmatic advertising to tap into an entirely new audience. In one campaign, it generated 650,000 new prospects with a return on investment (ROI) of 10:1 and increased awareness by almost 65%. 

How did it achieve such success? It referenced subscriber, cookie, and content data to identify audience segments (finance, politics, economics, good deeds, careers, technology, and social justice), creating more than 60 ad versions to target potential customers effectively. 

No longer was The Economist considered a dry, intellectual journal by most. Instead, it had new relevance. What’s more, it had new readers. 

Adtech isn’t limited to the internet. For example, how many people have you heard at least consider ditching cable and just using streaming services? Meet connected TV, which is anticipated to grow to reach 204.1 million users by 2022 according to eMarketer. 

As subscribers to services including Netflix, Hulu, Amazon Prime, and Disney Plus have increased, so have over-the-top (OTT) advertising dollars to the tune of $5 billion in 2020. These ads are typically highly personalized according to a viewer’s interest and cannot be skipped, but rather must be viewed to continue consuming content. 

Ads on our computers aren’t the only adtech at play. Digital out-of-home advertising includes the high-tech billboards, on-vehicle ads, etc. Where online advertising can feel nagging, outdoor advertising is innovating in a way that appears interesting and grabs attention. According to IBIS World, in 2019 billboard advertising revenue grew by more than $8.6 billion in advertising revenue.

Why invest in advertising technology?

Lots of companies these days don’t necessarily run on our dollars, they run on our eyeballs, and our clicks. According to VentureBeat.com, “all major ad-supported tech companies are ad tech companies. They market advertising technology and use technology to support their advertising businesses.” This includes Facebook, Google, Pinterest, and Reddit. 

Adtech is the way of the future, especially as technology evolves and consumers become increasingly glued to screens. In addition to enhanced targeting capabilities, programmatic advertising gives companies real-time insights, enhanced targeting capabilities, greater transparency, and better budget utilization. 

Advertising is part of the fabric of our modern culture. Because companies can use platforms to serve us advertisements, we have access to tons of information and entertainment for no cost. As a consumer, it’s hard to ignore. 

It’s not just Google searches and websites that are ideal for digital ads. “In-game brand advertising is set to see tremendous growth in the coming years,” says Ajitpal Pannu, CEO of Smaato, an adtech platform.  “We are building up a strong foundation to support this new media channel.” 

COVID, interestingly, has moved more eyeballs on screens than ever before. And while advertising spending is down across the board as companies move to save money, adtech spending is bound to rebound, making now an ideal time to invest.

How to invest in adtech?

Advertising is by nature a very broad industry. Just about every company advertises in some way, and the technologies driving those activities are all over the map. Fortunately, a search on Magnifi suggests that there are a number of ETFs and mutual funds to help interested investors access the growing adtech sector without having to invest in many different companies.

Magnifi is changing the way we shop for investments, with the world’s first semantic search engine for finance that helps users discover, compare and buy investment products such as ETFs, mutual funds and stocks. Try it for yourself today. 

This blog is sponsored by Magnifi. The information and data are as of the publish date unless otherwise noted and subject to change. This material is provided for informational purposes only and should not be construed as individualized investment advice or an offer or solicitation to buy or sell securities tailored to your needs. This information covers investment and market activity, industry or sector trends, or other broad-based economic or market conditions and should not be construed as investment research or advice. Investors are urged to consult with their financial advisors before buying or selling any securities. Although certain information has been obtained from sources believed to be reliable, we do not guarantee its accuracy, completeness or fairness. Past performance is no guarantee of future results. This content may not be reproduced or distributed to any person in whole or in part without the prior written consent of Magnifi. [As a technology company, Magnifi provides access to tools and will be compensated for providing such access. Magnifi does not provide broker-dealer, custodian, investment advice or related investment services.]


There's Alpha in Asia

“Made in China” is a phrase we all know well, but American shopping aisles bursting with “Made in China” goods are becoming more and more a thing of the past, especially as the depth and breadth of Asia’s economies develop. The truth is, this is not just a China story anymore— it’s a story of a new Asia bursting with emerging economies, high-tech industry, and a growing middle class.

Consider that the United Nations estimates that as of July 2020, Asia as a whole has a population of more than 4 billion. That amounts to about 60 percent of the world’s current population.

Asia is growing and its enormous population is buying more and more of its own stuff than ever before. It is estimated that “Asian-Pacific (APAC) countries will have seen a growth in their middle-classes by over 500 percent in the 20 years up to 2030.” This increased buying power will be nothing short of transformative, especially compared with 2 percent growth in Europe and a decline of nearly 5 percent in America over the same period.  

Asia’s global output is up 26% from the early 2000s and, according to McKinsey and Company, “Asia is on track to top 50% of global GDP by 2014 and drive 40 percent of world’s consumption.”

This growth isn’t just thanks to China, but small and medium-sized countries throughout the region, as well. Asian business hubs stretch from Singapore to Jakarta, Kuala Lumpur and Manila. In fact, according to an analysis by The Financial Times, Indonesia is on pace to overtake the world’s sixth-largest economy, Russia, by 2023. 

Not to mention, Asian exports are not reliant on the United States. Moreover, China’s total exports amount to 40% of the world’s consumption. Although exports to the United States fell by more than 8%, they remained about the same from 2018 to 2019. In other words, China was able to compensate for the drop in exports to the US by exporting more to the rest of the world. 

Yes, the region is seeing some political instability in 2020, with protests and crackdowns roiling Hong Kong and other parts of China. But, given the growth that’s happening alongside this, it will take more than that to slow down the Asian expansion.

What’s changing in Asia’s markets?

China is no longer simply making the cheap plastic toys that it may have once been known for. Rather, its products are increasingly high-tech and sophisticated. 

That means two things: The first is that in China, wages are on the rise. The second is that there is a new space globally for low-cost manufacturing that once belonged solely to China. 

Vietnam’s exports are up 96% since 2015, a surge led by the export of low-cost textiles. (It’s worth noting that Vietnam is also home to a global manufacturing base for Samsung.)

In India, Prime Minister Narendra Modi launched the “Make in India” initiative with the goal of developing India into a manufacturing hub that is recognizable on the global scene. And it seems to be working, with India’s exports up 22.5% since 2015.   

All of that manufacturing would literally go absolutely nowhere without streamlined logistics, however. “The logistics industry accounts for 15-20% of GDP in Vietnam and is expected to grow up to 12 percent in Indonesia.” In large part, this growth is thanks to both increased investment and streamlined e-commerce. 

Why invest in Asia?

Asia might be set to overcome the West as a center of trade and commerce, but it’s not there yet. And it’s not without challenges. Many countries that are home to emerging markets have also become home to the challenges of emerging countries.

Take infrastructure, as an example. 

Paired with challenging geography, poor roadways can devastate supply chains. But, supply chain challenges like those found in Asia can largely be overcome by technology solutions, such as Route Optimization, Predictive Alerts, AI-based forward and reverse logistics, and smart shipment sorting. Additionally, infrastructure spending is on the rise in Southeast Asia, through the formation of institutions such as the Asian Infrastructure Investment Bank and the Japan Infrastructure Fund.  

Countries like Indonesia have shown that economic growth for smaller, emerging countries is sustainable. Not only is Indonesia rich with natural resources, it is committed to specialized manufacturing including that of machinery, electronics, automotive and auto-parts. The country has slashed its “poverty rate by more than half since 1999, to 9.4% in 2019.” It’s most recent economic plan implemented in 2005 was for 20 years, broken into 5 year increments.

In all, the Asian continent, with its emerging middle class, increased focus on high-tech manufacturing, and participation by lesser-known counties, has long-term growth potential. And, with this momentum already in full swing, the future looks bright for countries across the continent.

That’s what happens when emerging markets “emerge” all the way into fully developed economies.

Magnifi is changing the way we shop for investments, with the world’s first semantic search engine for finance that helps users discover, compare and buy investment products such as ETFs, mutual funds and stocks. Try it for yourself today. 

This blog is sponsored by Magnifi. The information and data are as of the publish date unless otherwise noted and subject to change. This material is provided for informational purposes only and should not be construed as individualized investment advice or an offer or solicitation to buy or sell securities tailored to your needs. This information covers investment and market activity, industry or sector trends, or other broad-based economic or market conditions and should not be construed as investment research or advice. Investors are urged to consult with their financial advisors before buying or selling any securities. Although certain information has been obtained from sources believed to be reliable, we do not guarantee its accuracy, completeness or fairness. Past performance is no guarantee of future results. This content may not be reproduced or distributed to any person in whole or in part without the prior written consent of Magnifi. [As a technology company, Magnifi provides access to tools and will be compensated for providing such access. Magnifi does not provide broker-dealer, custodian, investment advice or related investment services.]


vegan

Vegan

From coconut coffee creamers and dairy-free yogurt to veggie burgers, the market for plant-based, natural foods and beverages are outpacing total food and beverage sales overall. 

According to SPINS’ 2019 State of the Natural Industry, the market for natural food and beverage products is growing at 5.0% compared to that of total food and beverages growing at 1.7% year-over-year.

While the growth is astounding, it’s not necessarily surprising. 

If you’ve been to the grocery store recently, you know that plant-based products are no longer limited to one aisle and aren’t marketed to just one specific type of consumer. Plant-based products are everywhere and stores are asking all shoppers to try them. 

In other words, you don’t have to be a strict vegan to buy the latest brand of oat milk or plant butter.  

And, more and more consumers are trying the plant-based versions of more traditional products, knowingly or unknowingly adopting a flexible vegetarian status known “flexitarian.”

The term flexitarian was coined in 2009 by registered dietitian Dawn Jackson Blatner who promoted eating more plants and less meat overall, or rather, being vegetarian most of the time. The diet is geared to promote overall health while not totally depriving followers of animal-based products.  

Because of the lax guidelines that allow for mostly eating more veggies that the diet promotes, consumers are increasingly adopting it in one form or another—and eating more vegan products than ever.  

Consider the success story of Beyond Meat, the plant-based burger company whose stocks skyrocketed after going public in May 2019, up 213% by November. According to UBS investment, Beyond Meat’s sales could reach $1.8 billion by 2025.

Who is buying Beyond Meat’s plant-based burgers? It’s not just vegans, but meat eaters, too. 

As the number of vegans (including those with part-time buy-in) is on the rise, so is the unprecedented demand for plant-based products in grocery stores, restaurants, and beyond.

What is Veganism?

Vegetarian diets typically eliminate meat and fish but allow for the consumption of eggs and dairy. Veganism is much more restrictive, eliminating all items of animal origin, including any food made with animal flesh, dairy products, eggs, or honey. The authentic Vegan lifestyle goes further, extending beyond food consumption to everything from textiles to clothing and cosmetics.

Generally, veganism offers three primary features: (1) additional curtailment of animal mistreatment and slaughter, (2) reduction of certain health risks, and (3) decrease of environmental footprint. 

That’s right, it’s good for the environment. 

Beyond being healthy for our bodies, veganism is promoted as a tool to combat climate change. Raising meat requires a massive use of grain and water. After slaughter, farmed animals are processed, transported, and stored, requiring the consumption of even more energy. Plant-based options tend to be more environmentally friendly. 

The number of people choosing to live a vegan lifestyle worldwide is on the rise.  In the United States, the demographic has grown by 600 percent between 2014 and 2018, from 4 million to 20 million people. The vegan population in the UK similarly quadrupled between 2014 and 2018.

This growth of veganism in conjunction with non- or sometimes-vegan consumers who buy plant-based foods for health and environmental reasons means a fast-growing market and more investment opportunities than ever. 

Why Invest in Veganism?

Vegan products are a $7.1 billion market, growing at a rate of 10.1%. The plant-based meat market alone is anticipated to be valued at $27.9 billion by 2025 globally. 

The market for other plant-based dairy alternatives, like cheese and milk, are also growing at unprecedented rates. Milk alternatives include soy milk, almond milk, rice milk, oat milk, coconut milk, and flaxseed milk. According to a recent study, the global dairy alternatives market is expected to grow, reaching $26.86 billion by 2023. 

Alternatives to traditional butter exist as well. The US plant-based butter industry is valued at $198 million and growing. Between 2017 and 2019, sales of plant-based butter increased 15%, growing faster than the sales of traditional butter.

And these trends are going mainstream. In addition to niche plant-based butter brands like Milkadamia and Miyoko, Country Crock debuted its “Plant Butter” made with olive oil, avocado oil, and almond oil in September 2019. Non-dairy yogurts made with almonds, cashews, or coconut are also on the rise. 

This phenomenon isn’t just on grocery store shelves, but in restaurants, too. White Castle offers the Impossible Sliders, Burger King offers the Impossible Whopper, and Carl’s Jr.’s offers the charbroiled Beyond Famous Star. 

And, Wall Street is taking notice the sales of plant-based products. Beyond Investing introduced the US Vegan Climate ETF, listed on the New York Stock Exchange under the ticker VEGN, in fall 2019. The ETF excludes oil-related stocks as well as meat-centric companies. 

Vegans are passionate about the environment and their health. And, no matter what degree of vegan one is, they are willing to pay the cash for the burger that’s just as good or maybe even better than the meat alternative. 

In other words, plant-based products are here to stay, and varieties and consumer buy-in are sure to grow.

How to Invest in Veganism

But getting involved in a market segment as large and diverse as veganism — which impacts everything from food & beverage, to personal care, clothing and more — isn’t as straightforward as it sounds. But, by investing in mutual funds and ETFs that offer exposure to veganism as a whole, investors can spread their impact out to all of the companies that are working in this sector. A search on Magnifi suggests there are a number of ways for investors to get involved in veganism this way.

Magnifi is changing the way we shop for investments, with the world’s first semantic search engine for finance that helps users discover, compare and buy investment products such as ETFs, mutual funds and stocks. Try it for yourself today. 

This blog is sponsored by Magnifi. The information and data are as of the publish date unless otherwise noted and subject to change. This material is provided for informational purposes only and should not be construed as individualized investment advice or an offer or solicitation to buy or sell securities tailored to your needs. This information covers investment and market activity, industry or sector trends, or other broad-based economic or market conditions and should not be construed as investment research or advice. Investors are urged to consult with their financial advisors before buying or selling any securities. Although certain information has been obtained from sources believed to be reliable, we do not guarantee its accuracy, completeness or fairness. Past performance is no guarantee of future results. This content may not be reproduced or distributed to any person in whole or in part without the prior written consent of Magnifi. [As a technology company, Magnifi provides access to tools and will be compensated for providing such access. Magnifi does not provide broker-dealer, custodian, investment advice or related investment services.]


Gap Inc

Gap (GPS)

A mainstay of malls and shopping centers across the U.S. in the 1990s, Gap Inc. (GPS) is today a clothing and accessories retailer with operations around the world. Founded as a jeans shop in San Francisco in 1969, Gap today sells a wide variety of products for men, women and children, including sportswear, activewear, and more.

The company’s six primary divisions include retail outlets The Gap, upscale store Banana Republic, discount retailer Old Navy, fitness wear brand Athleta, curated fashion site Intermix, and Hill City, a maker of performance menswear. 

As of 2018, Gap’s revenue was $16.6 billion and it was the largest specialty retailer in the U.S. It currently operates more than 3,700 stores worldwide, more than 60% of which are in North America.

Rationale

The most direct way to gain exposure to Gap is to buy its listed shares, of course, but its participation in the extremely competitive retail and fashion markets might make many reconsider that approach. Companies like GPS have to stay ahead of the constantly shifting trends in fashion in order to remain competitive in the marketplace. What’s more, Gap’s reliance on mall and shopping center locations puts it at risk as consumer choice moves away from brick and mortar shopping to more online purchases.

However, for investors interested in gaining exposure to the retail and consumer spending sector, rather than buying GPS shares themselves should consider buying funds that provide exposure to Gap and other similar firms. After all, the return drivers that will benefit GPS might also benefit other similar retail firms. As investment management is gradually moving to the construction of portfolios using ETFs and mutual funds in addition to single stocks, investors would do well to consider gain exposure to firms like Gap through these types of funds.

Investing in GPS

A search on Magnifi suggests that investors can gain access to GPS via a number of different funds and ETFs, including those shown below. 

Magnifi is changing the way we shop for investments, with the world’s first semantic search engine for finance that helps users discover, compare and buy investment products such as ETFs, mutual funds and stocks. Try it for yourself today.

This blog is sponsored by Magnifi. The information and data are as of the publish date unless otherwise noted and subject to change. This material is provided for informational purposes only and should not be construed as individualized investment advice or an offer or solicitation to buy or sell securities tailored to your needs. This information covers investment and market activity, industry or sector trends, or other broad-based economic or market conditions and should not be construed as investment research or advice. Investors are urged to consult with their financial advisors before buying or selling any securities. Although certain information has been obtained from sources believed to be reliable, we do not guarantee its accuracy, completeness or fairness. Past performance is no guarantee of future results. This content may not be reproduced or distributed to any person in whole or in part without the prior written consent of Magnifi. [As a technology company, Magnifi provides access to tools and will be compensated for providing such access. Magnifi does not provide broker-dealer, custodian, investment advice or related investment services.]      

 

 

 


Lululemon (LULU)

Who knew that selling yoga pants could be so lucrative? Chip Wilson, the founder of Canadian athleticwear retailer Lululemon Athleta (LULU) certainly did when he started the company out of his Vancouver apartment in 1998. In part, LULU arrived at just the right time. In the early 2000s, yoga was on an upswing, and between 2012 and 2016 the number of Americans doing yoga grew by 50%. Today, 1/3 of all Americans has tried it at least one, and the population of over-50 practitioners has tripled since 2015.

Lululemon designs and sells a wide variety of athletic wear, having expanded beyond its core product of yoga pants. Today the inventory in its 460 stores includes tops, casual pants, shorts, sweaters, jackets, undergarments, accessories, yoga mats, water bottles, shoes and more.

In 2018, Lululemon reported revenue of $3.29 billion, up from just $358 million a decade earlier.

Rationale 

A direct way to gain exposure to Lululemon is to buy the listed shares. But that can be a risky approach, given LULU’s focus on the consumer market. It’s fair to believe that Chip Wilson caught lightning in a bottle with the explosive growth of the yoga market shortly after he launched the company, but Lululemon’s breakneck growth since then has largely been predicated on new store openings and reaching out to new potential customers. However, fashion trends can change rapidly, and the population of customers who have not yet tried yoga or purchased from Lululemon is shrinking, reducing its future growth potential.

A solution that can dampen some of that volatility is to buy funds that provide exposure to Lululemon and other similar firms, rather than LULU shares themselves. After all, the return drivers that will benefit Lululemon might also benefit other similar firms in sporting goods, athleticwear, and footwear. As investment management is gradually moving to the construction of portfolios using ETFs and mutual funds in addition to single stocks, investors would do well to consider gain exposure to firms like LULU through these types of funds.

Investing in LULU

A search on Magnifi suggests that investors can gain access to LULU via a number of different funds and ETFs, including those shown below. 

Magnifi is changing the way we shop for investments, with the world’s first semantic search engine for finance that helps users discover, compare and buy investment products such as ETFs, mutual funds and stocks. Try it for yourself today.

This blog is sponsored by Magnifi. The information and data are as of the publish date unless otherwise noted and subject to change. This material is provided for informational purposes only and should not be construed as individualized investment advice or an offer or solicitation to buy or sell securities tailored to your needs. This information covers investment and market activity, industry or sector trends, or other broad-based economic or market conditions and should not be construed as investment research or advice. Investors are urged to consult with their financial advisors before buying or selling any securities. Although certain information has been obtained from sources believed to be reliable, we do not guarantee its accuracy, completeness or fairness. Past performance is no guarantee of future results. This content may not be reproduced or distributed to any person in whole or in part without the prior written consent of Magnifi. [As a technology company, Magnifi provides access to tools and will be compensated for providing such access. Magnifi does not provide broker-dealer, custodian, investment advice or related investment services.]