Why Nutmeg’s strategy seeks higher-than-normal exposure to the tech sector

Brad Holland


3 min read

Technology has disrupted the simple global village that once ruled international trade. As it continues to support globalisation, we explain the drivers behind Nutmeg’s investment strategy to seek higher-than-normal exposure to the tech sector.

commuters using tech

What in the world is going on in the world?

What do trade wars, Brexit, allegations of election tampering, market volatility, cyber-espionage, geopolitical turmoil and receding globalisation all have in common?

They are all symptoms of one continuous seismic change confronting the world. So, what in the world is going on? It all boils down to technology.

The old world

The old global order relied on agreements between sovereign states about trade and security matters. Trade centred on goods markets.

In its most simple form; natural resources would be moved from one state; let’s say Australia, to another; let’s say Japan. The product would then be manufactured and the complete product, for example cars or electronics, would be shipped back.

Now and again, when disputes erupted between two states, like-minded nations would form alliances to square up to each other, and in times of extreme tension this might escalate into a war.

The new world

Advancements in technology disrupted this simple global village. First, improved transport led to supply chains spreading around the globe and allowed China to become the low-cost factory for the largest, richest market in the world: the United States.

That heyday came to an end when the global credit crisis demonstrated that the Chinese trade surpluses were too large to be absorbed into the Western capital system.

Now, robotics and artificial intelligence are changing the balance of the comparative advantage of trade. The high wage US and Japanese economies can produce goods as cheaply as China.

Technology drives globalisation

Elsewhere, advances in computer-chip speed, memory, internet and satellite connectivity are having a huge impact on the globalisation of services. Money can now flow at one-third the speed of light, making transactions easier, but that’s not the end of the story; once a workable version of blockchain is worked out, transactions of any type could theoretically take place outside the control of the state.

Not only does service-based technology make the world a financially smaller place, they make ‘places-of-the-world’ more difficult to manage. Some states seek to control their people’s access to information. That control is threatened by technology, which is why some nation-states wish to control the technology deployed inside their territories. It’s why, for example, China has in the past required foreign companies to share their intellectual property before they are allowed to operate in China. This is a major factor behind the dispute between Beijing and Washington.

Technology has always been a disruptive force. It changes social systems and the way people interact with each other. The revolution that usually follows the introduction of new technology, often consigns traditionally held political and sovereign rules of thumb to the history books.

Adapting to this change also happens at different speeds. Often, entrepreneurs and industry are the first to change, followed by markets, government, and regulation. The full extent of technology-led developments can take some time to be known.

What does this mean for investors?

Nutmeg sees technology as a catalyst for change in the exchange of products, ideas and political pacts. There’s a difference between the technology stock bubble in 2000, largely understood as an internet boom, and what we are seeing today.

Twenty years on, a much broader technology has invaded the global village, deeply embedding itself in the production and distribution of goods and services as well as the conduct of social discourse.

There will be winners and losers. But technology companies will be over-represented among the winners. That’s why Nutmeg’s investment strategy seeks higher-than-normal exposure to a broad set of technology companies in customer portfolios.

Risk warning

As with all investing, your capital is at risk. The value of your portfolio with Nutmeg can go down as well as up and you may get back less than you invest.

Brad Holland

Brad Holland

Brad is Nutmeg’s director of investment strategy. A veteran – 28 years at last count – in financial markets, he started his career as a professional economist at the Australian Reserve Bank. He now specialises in economic and financial market strategy within investment management. Brad studied post-graduate quantitative economics at the University of Queensland, Australia. Despite living in London for 20 years now as a naturalised British citizen, he’s still not quite ready to support England-v-Wallabies.


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