iShares Digital Future Thematic ETFs are a range of funds that track STOXX indices.
Capital at risk. The value of investments and the income from them can fall as well as rise and are not guaranteed. Investors may not get back the amount originally invested.
Innovation is driving exponential progress in the technology and digital sector globally and beyond. By investing in funds focused on the digital future, investors can access companies well-positioned to benefit from structural shifts changing the way we live and work.
Omar Moufti, lead strategist on thematics for iShares EMEA, focuses on the digital future theme and introduces iShares’ Digital Future Thematic ETFs.
Hi, I’m Omar Moufti, Thematic strategist at iShares by BlackRock. Today, I will be introducing the theme of digital future and the funds that form our Digital Future range.
The digital transformation of our lives is clear for all to see today but still has a long way to go, along many different avenues and segments of our economy.
Some of the themes that form our vision of a digital future, are well-acknowledged, while others are in their earlier stages. But all are supported in the long run by social, economic and policy factors occurring in the real world.
Policy measures are set to bring forward the digital future in transportation & infrastructure.
Transport
We all recognize that the future for automotive is electric. But take-up of electric vehicles globally has varied widely. In the US for instance, the largest auto market by sales value, electric vehicles still accounted for only 6% of passenger vehicles sold, hinting at the growth potential. *
The passage of the Inflation Reduction Act, effectively the US’s comprehensive long-term climate bill, is set to accelerate the shift to electric via long-term tax credits for electric vehicle purchases.
Our Electric Vehicles & Driving Tech ETF invests in manufacturers & suppliers of electric vehicles & related components.
Infrastructure
Similarly, on both sides of the North Atlantic fiscal policy and spending is being oriented towards modernizing infrastructure with a focus on efficiency and sustainability.This means investing in energy efficient homes, improved waste management & water treatment, 5G & broadband.
With this policy focus, the path towards smarter and more sustainable cities has never been so clear.
Our Smart City Infrastructure ETF offers exposure to the technologies & services helping to improve efficiency and quality of services in urban environments.
Manufacturing
Shifting to the manufacturing side, developed markets could see a renaissance, as years of geopolitical tension, lockdowns, and supply chain bottlenecks have underscored the risk of highly regionally-concentrated manufacturing hubs.
And, once again, many of the US climate bill’s tax breaks and subsidies are contingent upon domestic manufacturing.
New factories, from semiconductors to electric vehicles production, in regions with higher labour costs, could mean greater overall robotic integration, to the benefit of our Automation & Robotic ETF.
Services
On the consumer side, online consumer services such as e-commerce saw tremendous growth during lockdowns. With economic reopening, those growth rates have tempered. But consumer preferences have not changed, favoring greater efficiency and simplicity.Lowered valuations & expectations set a conducive backdrop for our Digitalisation ETF which provides diversified exposure to the e-commerce, communications & digital infrastructure value chains.
Entertainment
It’s a similar story of tempering growth and lowered valuations in the entertainment segment.But greater acceptance of video gaming as a past time well into adulthood, more immersive experiences, innovative new hardware and game launches, remains the long-term growth story behind our Digital Entertainment & Education ETF.
Today, we see these two distinct segments of entertainment & education, converging over time as content providers & community managers leverage their platforms to help deliver global access to quality, lifelong education.
Healthcare
In the always-innovating healthcare segment, the digital future of big data and analytics, brings with its improvements in medical imaging and diagnostics, and shortened clinical testing and drug development cycles for precision medicines.
Our Healthcare Innovation ETF invests in biotech, medical devices, and research facilitators operating to solve some of the key diseases & ailments facing an increasingly ageing global population.
Security
Across our digital future themes, data is the common denominator. So, as we progress along the road towards integrated robotics, electric vehicles, immersive entertainment, smart cities, Innovative healthcare, defending this data from leaks or malicious actors is likely to grow in importance.
Digital security ETF invests in cyber security and data storage companies that can form the backbone that supports and defends our Digital Future world.
Thank you for your attention and feel free to navigate our website and product pages for more information. See you next time.
Healthcare has long been at the forefront of innovation, helping us to live longer lives. But ageing global demographics require continued advances. Fortunately, breakthroughs in genomics, biopharmaceuticals, artificial intelligence and miniaturisation, among others, are aiding with this daunting task.
is the increase in registered clinical studies worldwide since 2015.1
Forecast US annual spending on health care by 2030, growing by 5.1% annually.2
is the expected annual growth between 2022 and 2028 for the global surgical robotics market.3
There is no guarantee that any forecasts made will come to pass.
Source:
1. Statista, 28 March 2022
2. CMS Office of the Actuary Releases 2021-2030 Projections of National Health Expenditures, 28 March 2022
3. iData Research, Surgical Robotics and Navigation Market Analysis – 2022-2028, 22 September 2022
The iShares Healthcare Innovation UCITS ETF (HEAL) invests in companies globally involved in biotechnology, medical devices and equipment, and services for the healthcare industry. Further the benchmark index, STOXX Healthcare Innovation Index, incorporates Environmental, Social, and Governance (ESG) criteria in the methodology.
The mass adoption of robots, automation and artificial intelligence (AI) is heralding the fourth industrial revolution — after steam, mass production, and electronics. Robotics has the power to deliver cost savings and efficiency gains, helping to drive corporate profits for the coming decades, and addressing issues of precision, hazardous tasks, an ageing workforce and rising labour costs. After decades of offshoring manufacturing towards lower-cost locales, recent trade disputes and supply chain disruptions could increase the trend towards bringing manufacturing and assembly closer to developed-market demand, a potential boon for robotics suppliers.
is the estimated decline in cost for industrial robots between 2017 and 2025.1
is the expected size of the global industrial robotics market in 2030, from $37B in 2020.2
robots operate per 10,000 employees in South Korea’s manufacturing industry, twice as many as in Germany and three times more than the world average.3
There is no guarantee that any forecasts made will come to pass.
Source:
1. Statista, Average cost of industrial robots in selected years from 2005 to 2017 with a forecast for 2025, 7 September 2023
2. Industrial Robotics Market by Type, Industry, and Function: Global Opportunity Analysis and Industry Forecast, 2021-2030, February 2022
3. International Federation of Robotics, December 2022
The iShares Automation & Robotics UCITS ETF (RBOT) invests in the automation value chain, across industrial machinery, component makers, and software developers. Further the benchmark index, STOXX Automation & Robotics Index, incorporates ESG criteria in the methodology.
The digital economy is displacing established business models, shaking up industries, and creating entirely new ones. This revolution has been driven by greater internet connectivity, increased processing capabilities and, in the case of consumers, convenience. The digital sphere itself is in constant evolution with key areas of growth coming from e-commerce, 5G connectivity, cloud computing, software-as-a-service (SaaS), and artificial intelligence.
is the expected annual growth of revenue coming from global digital transformation.1
is the projected number of social media users in 2027.2
Projected smartphone data traffic growth globally in the period from 2023 – 2028.3
There is no guarantee that any forecasts made will come to pass.
Source:
1. Digital Transformation Market Size Report 2022-2030, Grand View Research, 2022
2. Statista, Number of social media users worldwide from 2018 to 2027, 16 September 2022
3. GMSA, The Mobile Economy 2023, March 2023
The iShares Digitalisation UCITS ETF (DGTL) invests in companies driving this digital transformation across the e-commerce, online communications, and the hardware, software and services enabling it. Further the benchmark index, STOXX Digitalisation Index, incorporates ESG criteria in the methodology.
The entertainment industry has evolved through time with increased adoption of technology and new consumer preferences. The number of people accessing entertainment online has grown over the past few years and the demand for digital experiences has revolutionised the way consumers play and learn. Many companies have supported and accelerated this trend by creating solutions to meet modern lifestyle demands and changing consumer habits within the areas of entertainment and education.
Average American time spent consuming media and technology content every day.1
Total number of gamers expected globally in 2022.2
Projected annual growth in the online education market between 2023 and 2030.3
There is no guarantee that any forecasts made will come to pass.
Source:
1. Statista, Media Usage in the US, 30 August 2023
2. Newzoo, Global Games Market Report 2022, 21 December 2022
3. Research and Markets, July 2023
The iShares Digital Entertainment and Education UCITS ETF (PLAY) invests in companies exposed to this trend across content platforms, electronic device manufacturers, online education providers, and throughout the gaming industry. Further the benchmark index, STOXX Digital Entertainment & Education Index, incorporates ESG criteria in the methodology.
The shift towards electric vehicles (EV) is underway and so are improvements in advanced driver-assistance systems (ADAS). The end goal being fully-autonomous vehicles. These trends are underpinned by a confluence of different factors. These include the need to reduce carbon emissions, falling cost of batteries, and advancements in information processing capabilities.
Source: BlackRock Investment Institute (BII), Investment Perspectives: Tracking the low-carbon transition, Page 5, as of July 2023
More electric vehicles (EVs) were sold globally in 2022 compared to 2019 reaching a record 10.5 million. EVs could represent 44% of global car sales in 2030, up from 14% in 2022.1
is the observed cost reduction for lithium-ion batteries between 2013 and 2022 in real terms. While parity with internal combustion engine vehicles varies by region, parity could occur as early as 2025 for EVs in Europe (at $124/kWh).2
Between US$300 billion and US$400 billion revenue could be generated from autonomous driving by 2035.3
There is no guarantee that any forecasts made will come to pass.
Source:
1. BloombergNEF, Electric Vehicle, 17 October 2023
2. BloombergNEF, Electric Vehicle, 17 October 2023
3. McKinsey, 31 January 2023
By screening for supplier connectivity, the iShares Electric Vehicles and Driving Technology UCITS ETF (ECAR) invests in companies across the value chain, from automakers and their suppliers, semiconductor manufacturers to battery makers.
Risk: There can be no guarantee that the investment strategy can be successful and the value of investments may go down as well as up.
Risk: Diversification and asset allocation may not fully protect you from market risk.
The global migration from the countryside to cities, and the challenges and opportunities that emerge as a result, are creating a new generation of megacities. Reducing the inefficiencies that come with this rapid growth, for instance, traffic jams, pollution, and waste, will require re-thinking of urban development, and introduction of novel technologies and services.
Urban population is expected to double by 2050 at which point nearly 7 of 10 people will live in cities.1
of global energy consumption is linked to the operation of buildings and by 2030, floor area is expected to increase by 20% making advances in resources efficiency key to reduce energy consumption.2
is the expected annual growth for the global smart city market between 2022 to 2030.3
There is no guarantee that any forecasts made will come to pass.
Source:
1. World Bank, October 2022
2. IEA, Buildings Report, September 2022
3. Global Smart Cities Industry, July 2022
The iShares Global Smart City Infrastructure UCITS ETF (CITY) invests in companies improving the plight of metropolitan areas globally across the sub-themes of resource efficiency (water, energy, waste), urban connectivity (mobility and 5G) and citizen well-being. Further the benchmark index, STOXX Global Smart City Infrastructure Index, incorporates ESG criteria in the methodology.
As the amount of data we create and use increases in a more digitally-connected world, so does vulnerability to cyber-attacks. The threat affects governments, NGOs, corporations, and consumers and can come from many sources including business competitors, state actors, and/or cyber criminals. Ongoing trends and innovations such as social networking, remote working, cloud-based applications, and the Internet of Things all appear set to increase the pervasiveness of technology in our daily lives and thus the risk of data breaches. Regulators are attuned to the danger posed by cybercrime, and legislation to combat it is on the rise.
The average cost of a data breach is breaking new records in 2022, up 12% from 2020 level.1
Proportion of companies planning to increase their cybersecurity budget in 2022.2
Number of IoT devices at the end of 2021. This number is expected to almost triple to 29.4B in 2030 increasing the need for cybersecurity.3
There is no guarantee that any forecasts made will come to pass.
Source:
1. Data Breach Report 2022, IBM (Period covered: March 2021-March 2022), 2022
2. Survey base: 1,638 technology & security executives. PwC, "2022 Global Digital Trust Insights", 2022
3. Global IoT Forecast Report, 2021-2030, 25 July 2022
The iShares Digital Security ETF (LOCK) invests in digital security companies across cybersecurity providers, hardware manufacturers, and physical security firms. Further the benchmark index, STOXX Global Digital Security Index, incorporates ESG criteria in the methodology.
The world’s major technology companies have made it clear that the metaverse – an immersive virtual world integrating digital and physical interactions – is the next frontier in global connectivity. Attaining a full-fledged metaverse will likely take multiple years or decades, backed by evolutions in hardware, software and platforms, but the investment opportunities can be captured today. Innovation is crucial in the digital sphere and companies preparing the shift towards the virtual revolution may stand to outperform peers.
is the potential Metaverse impact by 2030, from $US200-300M in 2022.1
Average numbers of daily active users in Q3 2022 on Roblox, an online and collaborative platform.2
annual growth rate for the global digital twin3 market between 2022 and 2028.4
There is no guarantee that any forecasts made will come to pass.
Source:
1. McKinsey, “Value creation in the Metaverse”, published in June 2022. Expected market size based on a bottom-up assessment of the use cases across 29 sectors
2. Roblox, Q3 Financial Results, published on 11 September 2022
3. A digital twin is a virtual representation of an object or system that spans its lifecycle, is updated from real-time data, and uses simulation, machine learning and reasoning to help decision making, IBM. April 2023 https://www.ibm.com/topics/what-is-a-digital-twin
4. Global Digital Twin Market Size, Share & Trends Analysis Report, Vantage Market Research, August 2022
The iShares Metaverse UCITS ETF tracks the STOXX Global Metaverse Index, which uses EconSight’s unique patent data analytics to identify companies that are market leaders, innovators, and specialists in the field of metaverse technologies. Companies with digital expertise that are currently investing in these technologies stand to be longterm winners, in our view.
Risk: Diversification and asset allocation may not fully protect you from market risk.
Explore the brochure of Thematic ETFs related to digital future, in more detail.
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