Artificial Intelligence

Consider that in 2002, i-Robot released the Roomba, an autonomous robot vacuum that cleans while avoiding obstacles. While that might have seemed like a miracle back then, it’s pretty standard today— selling for under $300 at a variety of major retailers. 

But, while in the near and far past many thought that artificial intelligence (AI) would present itself as robots, today it’s really more about smart computer programs and capabilities that are taking hold across industries. 

“AI is happening whether we like it or not. It’s a reality. And we can either lay victim to it, or we can invest in it,” according to Howard Brown, CEO of Ring DNA, in an interview with Yahoo Finance

According to Brown, AI is less about robots and more about “what we can do to augment the human experience.”

Today companies across industries are focused on improving their digital operations. According to a recent survey of CIOs from large enterprises around the world, “89% of CIOs said their digital transformation has accelerated in the past 12 months, and 58% said this will speed up in the next year.”

Still, there is a lot of room for AI implementation. According to the same survey, “70% of CIOs said their teams spend too much time doing manual tasks that could be automated, yet only 19% of all repeatable IT processes have been automated.”

Artificial intelligence is showing up everywhere from online chat bots to your local fast-food drive thru. Here’s what investors should know before they miss out. 

What is artificial intelligence? 

Artificial intelligence (AI) is a “wide-ranging branch of computer science concerned with building smart machines capable of performing tasks that typically require human intelligence.” 

AI is remarkable because it involves machine learning and deep learning. Machine learning essentially programs a machine to learn through a variety of algorithms. The more involved deep learning feeds data into an Artificial Neural Network (ANN), or “a very compute intensive network of mathematical functions joined together in a format inspired by the neural networks found in the human brain.”

The learning function of AI means that it has a “self-improving nature,” can reduce expenses and offer a predictive advantage; all of which is lending to an increase in the adoption of AI in a myriad of ways. 

While robots can be programmed to learn, so can applications that identify and prevent fraud, personalize shopping, improve medical diagnosis and treatment, predict transportation issues, and much more. 

Why invest in artificial intelligence?

From the advent of self-driving cars to spam filtering to smart voice assistants to detecting water leaks, artificial intelligence is becoming increasingly common, whether we choose to notice it or not.

AI’s power to improve industry processes is driving change in the ways companies do business across industries. According to PriceWaterhouseCoopers in its 2018 report Smart Money: AI Transitions From Fad to Future of Institutional Investing, “…from back office procedures to front office decisions, AI is becoming the preferred tool for gaining a competitive edge.”

Market leaders in AI include Alphabet (the umbrella company for all Google products which includes the Google search engine), Tesla and NVIDIA. Tesla collects data from its on-road autopilot vehicles to advance deep learning and hone outcomes in edge cases. In addition, Tesla is designing its own AI chips. NVIDIA sells about 80% of all GPU (graphics processing unit) chips, a product used for deep learning.

In Japan the government is investing in an AI powered matchmaking program to help change the trajectory of plummeting birth rates. 

The list goes on and it’s growing by the day. 

So, it’s no surprise that markets are anticipating that AI is expected to cause major disruptions in industries including healthcare, customer service and experience, banking, financial services, insurance, logistics, retail, cybersecurity, transportation, marketing, defense, and lifestyle by 2030. 

In the lending industry alone AI is enabling faster loan assessment, quicker response to fraud, reduced costs and time associated with executing strategies and financial reports, improved advisory services, streamlined client access, optimized trading strategies, and increased efficiency overall. 

As AI is increasingly adopted in the most innocuous and transformative ways, there is broad opportunity. 

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.]


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.]


Aquaculture

When you are in the grocery store or in a restaurant picking out dinner, do you insist on wild caught fish? Do you care if your fish is farm raised? Turns out, most people don’t. According to the United Nations, about 47 percent of the world’s total fish supply comes from aquaculture. This translates to a global aquaculture market that is expected to grow to more than $52.4 billion by 2026.

According to the Food and Agriculture Organization of the United Nations (FAO’s) 2020 report, “The State of World Fisheries and Aquaculture 2020,” per capita fish consumption grew from 9 kilograms in 1961 to 20.5 kilograms in 2018, equating to around 1.5% growth each year. Per the report, in 2017, fish consumption accounted for 17% of the world population’s intake of animal proteins, and 7% of all proteins consumed. 

That’s a lot of fish, and a huge opportunity for the aquaculture industry.

The market is responding to huge demand growing fast, with annual fish production expected to expand from 179 million tons in 2018 to 204 million tons by 2030. According to the FAO, aquaculture production specifically is projected to reach 109 million tons in 2030, representing an increase of 32% compared to 2018.

Still, most people might be surprised to learn that the “the number of fish eaten from fish farms is roughly even with the number of wild fish consumed, especially as the demand for fish has grown,” according to UC Santa Cruz researcher Anne Kapuscinski.

Here’s what investors should know about the aquaculture industry. 

What is aquaculture?

Simply put, aquaculture is the breeding, rearing, and harvesting of fish, shellfish, algae, and other organisms in all types of water environments, according to the National Oceanic and Atmospheric Administration (NOAA). 

Aquaculture often takes place in coastal marine waters and the open ocean. Aquaculture in the US produces numerous species including oysters, clams, mussels, shrimp, seaweeds, and fish such as salmon, black sea bass, sablefish, yellowtail, and pompano. In addition to producing food, aquaculture restores habitat, replenishes wild stocks, and rebuilds populations of threatened and endangered species, according to NOAA.

According to the Agricultural Marketing Resource Center, the top five fish producing countries in 2019 were China (63.7 million metric tons), Indonesia (16.6 million metric tons), India (5.7 million metric tons),Vietnam (3.6 million metric tons) and Bangladesh (2.2 million tons). Asia accounted for 89 percent of world aquaculture production by volume, most of which was produced by China. 

Why invest in aquaculture?

The world’s appetite for fish isn’t anticipated to slow down anytime soon. By 2030, the FAO anticipates that the global human population will eat 30 million tons of fish. 

In part, that’s because the world is demanding more protein than ever. Two strong drivers of the growing aquaculture industry include an increasing population growth and protein consumption per capita. Where this growth can potentially leave oceans overfished and depleted, aquaculture offers a creative solution.

According to Forbes, the fish industry “is a decade or more behind all other production animals with respect to innovation — and thus is one of the more attractive opportunities…for agtech investors and startups alike.” 

The industry, however, is not without challenges. From bacterial and viral infections among densely populated fish to environmental impacts, aquaculture isn’t perfect. 

There is, however, ample opportunity for scientific solutions. For investors, this means investment opportunities in everything from improved vaccines to fish food to genetic engineering of fish that are more resilient and adaptable. According to Global Market Insights, the global aquaculture vaccines market alone will reach $290 million by the year 2025. Even more, supplying nutrients to the aquaculture industry is a $60 billion opportunity

Investment in fish farming is happening now, and happening here. In November 2020, the company Pure Salmon announced that it will build a large indoor fish-farming operation in Virginia. Pure Salmon will invest about $228 million in the equipment and facility, which according to the news release, would be the “world’s largest vertically integrated indoor aquaculture facility.”

While aquaculture is lauded as more sustainable by comparison to the practice of overfishing, for example, there are some doubts about the ethics of it. To name a few, wild fish are often caught to feed farmed fish, questioning the efficacy of the system. Additionally, fish waste in densely populated open ocean farms can deplete oxygen in the surrounding marine environment. That’s not to mention genetic engineering, the living conditions of farmed fish, or other considerations. 

For investors interested in environmental, social and governance (ESG) issues, the Coller FAIRR Protein Producer Index can help. The Coller FAIRR Protein Producer Index is the world’s only comprehensive assessment of the largest animal protein producers on critical ESG issues.

The market demand for fish isn’t expected to slow down. And as such, aquaculture is expected to grow as a crucial industry that helps to feed the world’s population. According to the FAO, “to ensure a food secure future for all, the fisheries and aquaculture sector is key.” This means that there is ample opportunity for investors as the fish farming market continues to grow and develop.

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.]


Nanotechnology

The term nanotechnology might seem like something reserved for a science lab, but it is as close as the latest pregnancy announcement that you may have heard.

That’s right, the second pink line on a pregnancy test only appears if the hCG hormone is present. If the tester is pregnant, gold nanoparticles tagged with a specific antibody attach to the hCG on the second strip.

And nanotechnology is doing more than telling women they are pregnant. Advances are improving bulletproof vests, making plastic beer bottles possible, and coating products to make them better— from flame resistant furniture to fortified glass surfaces to antimicrobial bandages.

The global nanotechnology market is projected to reach $2.23 million by 2025 according to a study by Allied Market Research. This growth is credited to increasing applications across industries, including communication, medicine, transportation, agriculture, energy, materials and manufacturing, and consumer products.

What is Nanotechnology? 

A nanometer is the microscopic measurement of one billionth of a meter. For perspective, consider that one sheet of paper is roughly 100,000 nanometers thick. 

According to the National Nanotechnology Initiative, nanotechnology is, “the study and application of extremely small things and can be used across all the other science fields, such as chemistry, biology, physics, materials science, and engineering.” In other words, it’s the ability to manipulate and create matter, enhancing it for the purpose it will serve, at the molecular level. 

Why Invest in Nanotechnology?

Nanotechnology is an exciting investment opportunity because of its growing, impactful applications across industries. 

Nanotech innovation and their applications have a range of biomedical potential. In medicine, specifically, nanotechnology is solving real-world health challenges by innovating from prevention to diagnostics to treatment. 

For example, antibiotics have long been a standard treatment for infection. However, the overuse of antibiotics has resulted in increasingly drug-resistant bacteria. According to the Centers for Disease Control and Prevention (CDC), there were an estimated 119,247 cases of drug-resistant Staphylococcus aureus bloodstream infections and 19,832 associated deaths nationwide in 2017.

As an alternative to antibiotics, novel nanomaterials can combat pathogens, not only offering a more targeted delivery of medicine and therapeutics, but also a more targeted treatment. 

The potential for nano-driven solutions to public health issues is not lost on big investors. 

Novo Holdings REPAIR Impact Fund, recently invested EUR 7 million in Mutabilis, a company developing novel antibacterials for drug-resistent bacteria. 

And nanovaccines against both bacteria and cancerous tumors are also in the works, according to a recent report from the Advanced Materials “Biomimetic Nanotechnology toward Personalized Vaccines.” Not only can nanotechnology “increase the potency of vaccines,” it can personalize applications of both vaccines and treatments with the potential for tremendous social and economic impact. 

Nanotechnology is also helping patients suffering from endometriosis, a condition that affects 10% of childbearing-age women will experience endometriosis.

The traditional treatment for the condition was to surgically remove lesions, which often recur after surgery and require multiple invasive surgeries. Using nanotechnology, scientists instead employ tiny polymeric materials packed with a specialized dye. Not only do the tiny materials fluoresce to show where the lesions are, essentially providing imaging. They also kill the lesion cells by flaring to 115 degrees Fahrenheit upon exposure to near-infrared light, helping to remove the lesions.

Nanotechnology is also improving cardiovascular care by reducing the size and improving the effectiveness of instruments used for cardiac surgery. 

There’s even the potential for nanorobots, which have the potential to operate in the human body, analyzing and reporting on given tissues. 

Because nanotech also has broad potential beyond the healthcare field.

For example, nanotechnology is constantly improving electronics, which, as they become smaller and smaller, also become increasingly harder to manufacture. Nanotec can shrink these technology tools so that they fit in our pockets while also making them better at processing data, increasing memory space, lighter and more portable, and improving functionality overall. 

Nanotechnology is responsible for the lithium-ion battery, for example. Offering a minimum power draw and high-energy-density, these now commonplace batteries weren’t on the market until the 1990s. Since then, they’ve become increasingly more powerful and less expensive. 

And yet, the innovation hasn’t stopped. The world is now taking stock of graphene, a single, thin layer of graphite. Although graphene shares the same atoms as graphene, its properties are extremely different because the atoms are arranged differently. 

Nanotech Energy, a battery and graphene technology startup, recently secured $27.5 million in funding, according to the company. Founded in 2014, the company plans to release a non-flammable, environmentally friendly lithium battery that charges much quicker than those currently on the market in the coming year. 

How to Invest in Nanotechnology

Yes, the growth potential for nanotechnology is impressive, but the sector doesn’t come without risk. Although nanotech has been around for years, it is still considered an emerging field and the industry is still sorting out where the best, more profitable applications lie. This can make investing in individual nanotechnology companies a risky proposition.

However, a search on Magnifi indicates that there are a number of ETFs and mutual funds available to give investors broad exposure to this industry without concentrating their bets on any one company.

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.]


Emerging Markets

With growing, increasingly affluent populations and innovative technologies, emerging markets offer opportunity for diversification, exposure to various stages of the economic cycle, and attractive valuations. 

The top five emerging market economies— Brazil, Russia, India, China and South Africa—are commonly referred to as the BRICS. Formalized in 2010 when these companies represented just 11% of global GDP, these countries have experienced tremendous growth since then, a trend that is expected to continue for the foreseeable future. The International Monetary Fund anticipates that by 2030, the BRICS nations will make up over 50% of global GDP. 

While the BRICS countries are enormously different in terms of economies, structures, and cultures, they all have large populations and promising futures. China and India, for example, have become major players in the technology sector. Brazil is the second largest food producer in the world, second only to the U.S. Russia and South Africa are home to rich natural resources. All are home to potential supply chains and new consumer markets.

Here’s what you should know about the world’s top emerging markets and how to invest in them. 

What are the BRICS?

As mentioned, the BRICS countries include Brazil, Russia, India, China and South Africa.

Brazil has a GDP of $1.868 trillion, making it the eighth-largest economy in the world. The country is also a member of Mercosur, a South American free trade area that includes Argentina, Brazil, Paraguay and Uruguay, which is home to three quarters of the total economic activity on the continent. Mercosur has an annual GDP of about US$5 trillion and is home to more than 250 million people.

Russia is rich in natural resources, has strong emerging industries, and a growing middle class. Russian GDP has experienced steady growth since 1998. In 2018, it increased by 1.8%, thanks to solid international growth and rising oil prices. As of 2019, its GDP is $1.64 trillion.

Russia is the dominant partner in the Eurasian Economic Union (EAEU), which includes Armenia, Belarus, Kazakhstan, Kyrgyzstan and Russia. These countries together boast a GDP of $5 trillion and are home to a population of 183 million. There are talks about free trade agreements with other areas, and when reached, it will no doubt change the supply chain. 

India’s GDP in 2019 was $3 trillion. Whereas politics play a role in the uncertainty of investing in some emerging economies, that’s not the case for India. Since gaining its political freedom from Britain in 1946, India established and has since successfully maintained strong parliamentary democracy. The country is the dominant partner in the South East Asian Free Trade Area (SAFTA), which includes Afghanistan, Bangladesh, Bhutan, India, The Maldives, Nepal, Pakistan, and Sri Lanka. The populations in these countries amount to a market of 1.6 billion people. 

China has a particularly strong manufacturing sector, and not just for “Made in China” products exported around the world. According to the National Bureau of Statistics, three fourths of China’s 6.6% GDP growth in 2018 was credited to consumption. And, its growing consumer base, with its growing wealth, wants quality. 

According to Forbes: “South Africa ranks high worldwide for investor protection and the extent of disclosure.” That fact has not been lost on foreign investors, with FDI into South Africa growing by 446% to 7.1 billion in 2018. China and Russia have both invested heavily in Africa.

In addition to being home to the most developed stock market in Africa, South Africa boasts natural resources including gold, iron, ore, coal, platinum, uranium, chromium, and manganese nickel. 

Why invest in emerging markets?

Emerging markets tend to carry a varying amount of political and economic risk, depending on the country. But, on the whole, the sector has lately outperformed more established markets in Europe and North America.

COVID-19 has made this divergence even clearer, with the asset class coming nearly all the way back to pre-pandemic levels as of October 2020. This performance was in part in lockstep with the rest of the world, but since emerging markets stocks tend to fall further in bad times, they have come roaring back even stronger than their first world peers.

Per Lazard: “Following a drawdown of nearly 35% in the first quarter and a sharp 18% recovery in the second quarter, the MSCI Emerging Markets Index rose 9.6% in the third quarter to climb nearly all the way back (96%) to its pre-COVID-19 peak.”

But, as such a large sector that’s spread across so many different countries, investing in the growth of emerging markets can’t be focused on just a few companies. Fortunately, a number of ETFs and mutual funds allow investors to access all of the asset class at one time. A search on Magnifi suggests a number of options for investors interested in the emerging markets.

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.]


Data Infrastructure

We shop online, we send emails, we subscribe to newsletters, we stream television shows, we listen to podcasts, we Instagram, we tweet, we share on Facebook, we Google, and in doing so, we create data.  We create tons of data. 

In fact, 1.7MB of data is created by every person on earth every second of the day. In the last two years alone, 90% of the world’s data has been created according to the Information Overload Research Group (IORG).

Where is all of this data coming from?

Every day, 306.4 billion emails are sent, and 5 million thoughts are Tweeted. One scroll through our inbox might make us feel like the extent of data overload isn’t that unbelievable, after all. 

The fact is that we do a lot of online sharing. Companies that want consumer dollars know this, and they aren’t standing idly by. Beyond the giants of the tech industry like Google and Amazon, small- and medium-sized enterprises increasingly want effective data analytics tools to maximize revenue, according to Advance Market Analytics. 

Interestingly, according to Forbes, jobs including Data Scientists and Big Data Engineers are in demand now more than ever before. These companies are investing in better data infrastructure to get better data. 

All of that data, and all of those needs, make the data infrastructure ecosystem increasingly complex. Here’s what investors should know about this growing industry that’s not expected to slow down anytime soon.

What is data infrastructure?

Before diving into data infrastructure, let’s discuss big data—or, the information that companies everywhere are trying to generate insights from. Big data has four “Vs” or measures of value: volume-based, velocity-based, variety-based, and veracity-based. 

Volume-based value means that “the more comprehensive your integrated view of the customer and the more historical data you have on them, the more insight you can extract.”

Velocity-based value means that the faster that “you can process information into your data and analytics platform, the more flexibility you get to find answers to your questions via queries, reports, dashboards, etc.” 

Variety-based value means that “the more varied customer data you have – from the CRM system, social media, call-center logs, etc. – the more multifaceted view you develop about your customers.”

Veracity-based value refers to the accuracy and cleanliness of customer data. 

Why do these Vs matter, again? They are the end goal of good data infrastructure, which is the way that data is used to provide useful insights. It means having the “right tools for storing, processing and analyzing data.

Let’s start with storage. It seems like almost everything is stored on the cloud these days, but where exactly is that?

The cloud is typically an off-premises data center that is accessed remotely through the internet. Cloud data centers allow clients to manage their data through third-party managed services, using hardware that’s run and serviced offsite by cloud companies in physical locations around the world. In essence, these companies are creating a virtual infrastructure for the systems that used to be housed on-site in every corporation.

With the overwhelming growth in data creation, physical data centers that service these cloud companies are multiplying, and so is investment in them. 

Storage, of course, is only one component of data infrastructure. Beyond storage, data infrastructure includes the network that transfers the data, the applications that host the analytics tools and “the backup or archive infrastructure that backs it up after analysis is complete.”

Why invest in data infrastructure? 

According to a report by the Motley Fool, “data is the oil of the digital economy.” 

Effective data infrastructure means more money and more efficiency, and not just for retailers figuring out how to get an online shopper back to their site to add something to a shopping cart. 

Bankers, for example, can use big data to help minimize risk and fraud. Moreover, manufacturers can use it to quickly troubleshoot problems, making better business decisions. 

For all sorts of businesses, benefits of using data strategically or prioritizing good data infrastructure include reduced costs, reduced time spent, optimization of product development and allocation, and more informed decision making.

According to an Advance Market Analytics report, the demand for big data as a service is driven by (1) an increasing demand for real time data analytics solutions, (2) the growing use of big data to identify fraud, and (3) a significant data influx for small and medium sized enterprises that want effective data analytics tools to maximize revenue. These are aided by market trends including the (1) the rise of cloud computing and the integration of big data with cloud-based services, (2) a huge influx of data, and (3) more modern business models. 

The power of big data is a frontier of sorts. And, beyond the companies looking to improve their own businesses by employing data services, there are a multitude of innovative companies streamlining huge amounts of data into useful information. 

For investors, this means that there is more than one way to invest in this growing industry. Fortunately, there are a number of ETFs and mutual funds available for investors interested in supporting big data and the growth of data infrastructure. For instance, a search on Magnifi suggests a number of different options.

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.]


Green Initiatives

The sky over the Bay Area is covered with a smoke so thick that it is blocking the sun, leaving it orange and ominous. The image (even in a news article) is a wince-worthy reminder that we are in the year 2020, and the world is different.

With a record 900,000 acres of wildfires burning across Oregon, more than 10% of the state’s 4.2 million population have been evacuated, according to the Oregon Office of Emergency Management. That’s a lot of people, and evacuations aren’t anticipated to end there. In total, 12 western states are burning somewhere, with Oregon, California, and Washington most severely impacted. 

“There’s certainly been nothing in living memory on this scale,” describes Daniel Swain, a climate scientist at the Institute of the Environment and Sustainability at the University of California in an interview with the New York Times

Extreme weather is a new reality, and it matters a lot to the future of economies around the world. In January 2020, before the most recent fires, the Bank for International Settlements (an umbrella organization for the world’s central banks) predicted that the disruptive effects of climate change could usher in the next financial crisis. 

This report was not a one off. According to the January 2020 Global Risks Report by the World Economic Forum, the top five global risks are climate-change related. Extreme weather, which includes floods, storms, wildfires and warmer temperatures, is putting millions at risk for food and water insecurity, property and infrastructure damage, and displacement. 

Now, it’s September and we are looking from near or far at the hazy orange sky above the Bay Area wondering: what’s next?

Where climate change was once a theory that people accepted or not in the same way that they preferred cream or not in their coffee, things are changing fast. This is especially true among millennials, who are making no mistake about where their money is being invested, namely into sustainability-oriented funds.

In what might be considered a ray of hope in a strange world, their environmental investment dollars are starting to add up and smash investing records. 

Here’s what environmental investing is and why it has more momentum than ever before. 

What is green investing?

In 2019, “estimated net flows into open-end and exchange-traded sustainable funds that are available to U.S. investors totaled $20.6 billion for the year,” according to Morningstar. “That’s nearly 4 times the previous annual record for net flows set in 2018.” This near exponential growth in investor interest is in part attributed to younger investors with a specific interest in the environment. 

Perhaps even more impressive, in the first quarter of 2020, sustainable investing totaled $10.5 billion, keeping momentum despite the economic downturn ushered in by the pandemic. 

So, where exactly are these dollars going?

It depends. When it comes to Environmental, Social, and Governance (ESG) investments can look much differently from one to the next. 

For one, some investors have a specific interest in “climate change innovators.” According to MSCI, these are companies working to innovate and scale new technologies in a way that solves climate problems in new ways. Beyond investing in the next big technology that might lead us to a net-zero carbon world, investors are looking more and more at the environmental policies of the companies that they invest with across the board. These policies include water management strategies that use water responsibly and the prioritization of protecting biodiversity in corporate operations.  

The relevance of biodiversity to our day-to-day lives is as close as the latest summer “Save the Bees” campaign. Honeybees are crucial for pollinating much of the global food supply, from apples to almonds. It’s estimated that bees are responsible for one of every three bites of food eaten in the United States. In addition to the use of insecticides used for many commercial crops, the destruction of habitat and decline in biodiversity have severely impacted this important species.  

In other words, in today’s world, how businesses do business matters greatly, not only to the environment at large, but also to the long-term value of a company. To address that, companies are putting more effort than ever into describing how they meet sustainability standards in their business operations. 

Why invest in sustainability? 

In a letter to CEOs, Blackrock CEO, Larry Fink describes climate change as “a defining factor in companies’ long-term prospects.” According to Fink, “awareness [of climate change] is rapidly changing, and I believe we are on the edge of a fundamental reshaping of finance.” 

Fink anticipates a “significant capital reallocation” into sustainable strategies as millennials, who are currently pushing for institutions to develop sustainable strategies and who will eventually become the policy makers and CEOs of the world. 

In other words, environmentally focused investing is the future. 

Not only is it becoming more popular among millennials, it is paying off for investors. According MSCI, “There is a direct, dollar-value payoff for companies to better manage their ESG risks or meet stated sustainability commitments.” 

Interestingly, since the arrival of COVID-19, awareness to and demand for ESG products is on the rise. Not only did the pandemic accelerate interest in these products, it gave them an opportunity to demonstrate their resilience, with ESG investments less impacted by the pandemic-driven market drop in the spring. 

If you are ready for a certain investment in an uncertain world, environmental investing is a natural choice.

How to invest in green initiatives

The environment, of course, impacts every one of us and touches every industry. Investing in such a broad theme can be challenging for investors. Fortunately, a search on Magnifi suggests that there are a number of ETFs and mutual funds that can help investors access this growing and all-encompassing sector.

 

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.]


SaaS

Software-as-a-Service is now standard, from mobile phones and laptops to business solutions for the largest of entities. It seems that there’s an app for everything, and it’s all personalized to each user’s credentials. 

Is your gym closed during Covid-19? Subscribe to Truecoach to build an online training platform for customers. Need to set up an online store, especially with COVID-19 closures? Build one on Shopify. Too busy to make a baby book? Text Queepsake your baby milestones and they’ll make one for you. (Not kidding.)

The solutions are big, small, and endless. 

But, it wasn’t always that way. 

Cloud computing has transformed how users interact with software. Before the software-as-a-service model, users had to purchase their software, either on physical media or via direct download, and had to pay for updates or replacements as technology improved. These days, that’s not how it works. 

Rather than purchase software annually or biannually, users pay for access to the software that they need on a subscription basis. They have credentials and they pay a small fee to accomplish their needs.

This model has transformed how we operate as a society, and it offers a frontier of investment opportunities as software companies strive to create solutions for the next big thing.  

What is SaaS?

Salesforce, which pioneered the software-as-a-service model in 1998 defines software-as-a-service as “a way of delivering centrally hosted applications over the internet as a service. SaaS applications are sometimes known by other names: Web-based software, On-demand software, and Hosted software”

How is this different from previous models?

Consider that hardware is the physical computer or user device. Now consider that software is the programs and apps that help users do things on the computer. 

Before software-as-a-service, customers would buy software housed on a physical source, such as a compact disc. After purchasing, they would take it home, download it to their computer, and then use it. While this utilization of software was helpful, it was also exceptionally hard for companies to update.  

It also wasn’t the most user friendly. For example, if someone was using a tax software before SaaS, they would purchase the software, download it, and input their information. However, every year, they would need to repeat the process in full. Knowing the autofills and recalls of today’s applications, starting from scratch seems tedious and time consuming.

Not to mention that because traditional software is so difficult to update with information, such as the annually revised tax code, for example, users would need to repurchase the software every year. 

Software-as-a-service is different in that it doesn’t require customers to purchase software. Instead, users purchase access to software that’s available on the cloud. 

What exactly is the cloud? It’s a “a vast network of remote servers around the globe which are hooked together and meant to operate as a single ecosystem,” according to Microsoft. 

This type of infrastructure has changed the way software companies administer software, users access and use software, and multiplied the uses and ease of use of software products. For one, SaaS companies can focus on improving their product rather than dedicate energy to producing and marketing new versions. It limits distribution costs like packaging. It also does away with the hassle of administering licenses because the software can only be accessed by paying customers. 

It has also changed payments from one-time to subscription-based. While subscription fees are much smaller from month-to-month than the one-time purchase fees previously were, the fees often add up to more than the cost of the software over the course of the year. 

For companies, pivoting to SaaS has more perks. Because the functions of SaaS have become so familiar and house a user’s data, switching services is often a hassle despite the minimum software cost. This user data can also be leveraged by companies to test new features. 

Why invest in SaaS?

There have been many success stories in SaaS, from Salesforce to Shopify. 

In 2015 at its IPO, Shopify was valued at $1.27 billion. As of spring 2020, it’s valued at $127 billion. Founded by Tobias Lütke and Scott Lake, Shopify started as an online store in 2004 to sell snowboards when they couldn’t find a platform that worked well for them. Now, its e-commerce platform is used by individual sellers and big companies like Google. 

And, the industry is poised to keep growing, especially in the wake of COVID-19

Consider the workforce shift to remote and the Zoom solution, connecting coworkers, families, and even loved ones in nursing homes. Another SaaS platform on the rise is Dynatrace, which provides software intelligence that streamlines user experience and improves business outcomes. 

SaaS companies are solving problems from providing e-commerce solutions for businesses, business solutions that are making remote work scenarios work, to giving users access to platforms that help them do everything from monitoring their finances to staying fit to doing their taxes. 

As the world adopts new post COVID-19 norms, these new solutions are likely to stay in one form or another. 

How to invest in SaaS

Naturally, in an industry as large and diverse as software, picking winners and losers can be challenging. However, for those investors interested in accessing the segment more broadly, there are a number of ETFs and mutual funds available to help streamline the process. A search on Magnifi suggests that there are many SaaS funds available to choose from.

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.]


gaming

Video Games

If the image that comes to mind when someone mentions video games is a teenage boy sitting in their parent’s darkened basement playing Mario Kart, surrounded by discarded Mountain Dew cans and Doritos bags, then it is time to discard this outdated stereotype.

Whether or not you yourself enjoy playing video games in your leisure time, gaming has evolved considerably and expanded well beyond its niche origins to sit squarely in the entertainment and cultural mainstream. Fortnite, you may recall, became a global cultural phenomenon following its 2017 release, with everyone from World Cup soccer players to Michelle Obama getting in on the dances popularized by the game.

The demographics of gaming are rapidly evolving with this expansion into the cultural mainstream. In a recent study by AARP, the percentage of adults age 50-59 who play video games at least once a month increased from 38% in 2016 to 44% in 2019, with women more likely than men to regularly play.

Gaming’s explosion in popularity is due, at least in part, to transformative changes in the video game industry over the past decade.

Ten years ago, if you wanted to play the latest game, you would go to a local store (GameStop, for instance), buy the game for around $60, and take the discs home to install/play. These days, mobile gaming (primarily on smartphones) accounts for the largest share of total gaming revenue worldwide, and popular games are often free to download and play. Developers monetize these free games by offering players in-game purchases.

Another relatively recent development is the rise of subscription gaming, which offers players access to a multitude of games for a monthly subscription fee. Similar to the “streaming wars” between Netflix, Amazon, Hulu, etc., developers are scrambling to build competitive subscription services as they work to attract larger shares of the growing market.

For those interested in the investment potential of this dynamic market, there are a few important points to understand.

What are video games circa 2020?

The Cambridge Dictionary defines a video game as “a game in which the player controls moving pictures on a television screen by pressing buttons or moving a short handle.”

Video games have been around in one form or another for decades, beginning with arcade gaming in the 1970s and transitioning to home gaming in the late 70s and early 80s with popular titles such as Space Invaders, Frogger, and PacMan.

Gaming today largely falls into three distinct categories: console gaming, personal computer (PC) gaming, and mobile gaming. Console gaming happens on devices that are built exclusively to play video games (think PlayStation, Xbox, etc.), while PC gaming happens on high-performance personal computers, and mobile gaming, as the name implies, happens on your mobile device (such as your smartphone or tablet).

Until relatively recently, console and PC gaming were the dominant forces in the video game industry, but the recent explosion of smartphone use and internet connectivity globally has dramatically reshaped the industry.

According to market research firm Newzoo, mobile gaming is currently the fastest-growing segment in the video game industry, and revenues from mobile gaming account for 46% of the total gaming market in 2019. This isn’t to say that dedicated gamers are ditching their consoles and PCs in favor of games on their smartphones; rather, the market is expanding as more people gain access to free or inexpensive games through their mobile devices.

This expansion and diversification of the gaming ecosystem have given rise to novel revenue streams; most notably, live streaming and esports.

Live streaming involves gamers broadcasting themselves playing video games live on the internet. The practice has become wildly popular, as evidenced by Amazon’s 2014 acquisition of the streaming startup Twitch for $1 billion.

Esports, meanwhile, refers to competitive, organized video gaming. You may recall the story about the 16-year-old who went home with $3 million after winning the 2019 Fortnite World Cup.

Global revenues from the burgeoning esports market exceeded $1 billion in 2019, an increase of 26.7% over 2018 revenues. The emergence of live streaming and esports has fueled greater interest in gaming while offering outside investors a new way to reach this diverse group of consumers.

Why invest in video games?

According to Newzoo’s 2019 Global Games Market Report, there are more than 2.5 billion people globally who play video games, and global revenue from gaming reached $148.8 billion in 2019. The U.S. market alone generated about $35.5 billion in 2019.

As a point of comparison, the 2019 global box office for films reached a record $42.5 billion, and the U.S. box office finished with $11.4 billion. This means that in 2019, people spent more than three times as much on video games as they did on seeing movies.

This remarkable performance comes amid a changing revenue landscape in which console and PC gaming account for less and less consumer spending.

Mobile gaming comprised about 46% ($68.2 billion) of overall market revenue in 2019 – an increase of 9.7% over 2018 revenues. Though smaller than mobile, console gaming continues to see healthy growth, occupying 30% of the market ($45.3 billion) with an increase of 7.3% from 2018.

Newzoo forecasts that video game revenues will grow to $196 billion by 2022 at an annual growth rate of 9%. Mobile gaming will continue to grow over the next several years, increasing from 46% of the total market in 2019 to a forecasted 49% by 2020 ($68.2 billion to $95.4 billion).

Mobile gaming’s expansion in the market may even be accelerated by outside factors, including the rollout of 5G networks (faster connectivity means better gameplay in more places) and further advancement of augmented/virtual reality (think Pokémon GO).

The video game market offers a unique investment opportunity because the industry is projected to continue its extraordinary performance in the coming years, and the various segments offer a wide variety of options when it comes to risk vs. return.

How to invest in video games

However, despite their popularity and long-standing growth, investing directly in the video gaming sector can be challenging. There are hundreds of different companies working on individual gaming properties, and the rise of mobile gaming has introduced new players to the sector, such as mobile providers and hardware manufacturers. However, a search on Magnifi suggests that there are a number of other ways to profit from the growth of video games as a whole.

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.]