Hermes GPE / Insights / Peter Gale, CIO and Head of Hermes GPE, shares his outlook for 2021

Peter Gale, CIO and Head of Hermes GPE, shares his outlook for 2021

2020 has been a watershed moment for many of the structural megatrends that had already been underway in the global economy. In order to make sense of where opportunities lie in the ‘new normal’ and act accordingly, investors will need to update their mental maps and assumptions in order to successfully to navigate the post-COVID environment.

The pandemic represents one those existential crises that result in lasting changes in attitudes and behaviours. Technological disruption is leading to the decay of old business models and the emergence of new ones, and the range of investor return outcomes is being amplified. Fat tails will be part and parcel of the new normal.

During 2021, businesses, consumers and societies at large will continue to build on new habits formed during 2020, with an emphasis on adjusting to the requirements of an increasingly virtual economy. For companies, this means accelerating plans to digitalise all aspects of their operations, while consumers will continue their own digital shift in the way they shop, play and live.

With technology adoption in many parts of society accelerated by years in a matter of months over the course of 2020 – think cloud adoption, virtual healthcare and e-commerce – we expect the marked bifurcation of the economy to continue and indeed accelerate further over the coming years. The developments of 2020 and 2021 are likely to only mark the beginning of more profound change.

Our observations are set against the context of an accelerating pace of change in innovation that had been steadily increasing even before the onset of the COVID-19 pandemic. Our private equity investment programs with their forward-looking thematic investment strategies have been actively seeking out innovative high growth companies across the globe. We look for market segments that are experiencing structural growth tailwinds and we remain confident that we can continue to deliver exceptional long-term risk-adjusted returns for our investors in the post-COVID era.

Applying a sustainable investment lens throughout this dynamic and changeable environment will ensure that the right investment decisions are made that will enhance outcomes for all of us. The pull from populations and consumers and the necessity of addressing climate change creates multiple business opportunities for companies that provide innovative solutions around the future of nutrition, net zero economies and responsible consumerism.

Peter Gale, CIO and Head of Private Equity