Liontrust comments: prospects for 2021 are bright

Storm Uru, Global Equity Team for Liontrust

Many of us are in a hurry to turn the page on 2020 and the prospects for 2021 are bright – a vaccine, the ability to see friends and family again, maybe even a little travel. But for some companies who have been riding the wave of technological change, have leadership positions and have focused on innovation, 2020 presented a once-in-a-lifetime position to outcompete undercapitalised, unprepared rivals.

Even before this year, the past decade has witnessed a doubling in the rate of innovation – 300,000 US patents per year versus 150,000 per year in 2000s. Look no further for evidence of what we have witnessed this year – a complete bifurcation between those that have innovated and those that have not – than comparing Amazon with H&M.

This is not a new trend, as technology adoption speeds have been accelerating for decades. Those companies which have harnessed technological change to drive lower prices or higher quality products for customers are well positioned to drive shareholder returns over the next five years.

2020 was unlike any other year, and those companies that benefited from the demand-side shift now have an unprecedented opportunity to convert this leadership position and become the next Alphabet or Microsoft. These are companies which are part of our everyday life and provide services we rely on.

Innovation is one of the most important drivers of shareholder wealth creation and this year it has become the most important, offering companies that were prepared an opportunity like no other.

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