Moritz is certainly correct about the online trend that has been under way for years. As the chart above shows, internet retailing has delivered 271% total return over five years compared to only 22.5% for global equities (MSCI World). Software and services companies have also enjoyed the tailwind delivering 135%. The media and entertainment industry group has only delivered 30%, but the historical comparison is difficult as the global equity indices saw a major classification change in late 2018, with internet companies such as Facebook and Alphabet being moved to this industry group. The media and entertainment industry group consists of: 1) media 2) entertainment and 3) interactive media & services (this is where Facebook, Alphabet and Tencent are placed), and it is especially in this third group where we’ll see future growth.
Everything related to the online economy seems to have better return on capital as the physical limits are less pronounced than for say airliners and miners. We believe the trend of digitalisation will continue over the coming decade and investors should have exposure to this trend in their portfolios. The table below provides a long list of companies offering exposure to many different sections of the online economy and increasing digitalisation. The combined market capitalisation represented on this list is $8.6trn across 69 single stocks, and we’ve also included four ETFs tracking some portion of this group for those that want a simpler way to invest in the overall trend.