The Red Thread: The Disruption Edition

Investing through change

An exploration of disruptive and innovative forces shaping economies and markets.

Portfolio of Barry Gill

An introduction from Barry Gill,
Head of Investments

"[What counts is] competition from the new commodity, the new technology, the new source of supply, the new type of organisation … competition which … strikes not at the margins of the profits and the outputs of the existing firms but at their foundations and their very lives." Joseph Schumpeter

Disruption is hard to define. In its broadest sense, it can be anything that interrupts an event, activity or process. In this publication, we focus largely on the technological and commercial side of its far-reaching tentacles. And where we choose to lean into its geopolitical tendrils, we do so from a sustainability lens – to cover political disruption more widely would warrant a whole separate edition!

Ultimately, disruption (and by extension innovation) is key to business and the global economy. Technological change is the driving force behind productivity, which is in turn the driving factor of economic output. Investors who aren’t thinking about disruption are neglecting their duties. Disruptive innovation is often created in markets that incumbent industry leaders overlook. The investor’s dilemma tackles the thorny issue of valuing hyper-growth companies, concluding a blend of art and science is necessary. Magnificent moats looks at the current crop of superstar companies and their relative competitive advantages. Megatrends and disruptive innovation argues our sector- and country-based view of equity markets is somewhat anachronistic and that we should invest along ‘big picture’ theme-based lines.

A tug-of-war transition assesses the competing forces bearing down on energy majors. With the transition set to take longer than any purists would like to admit, balancing the old and new worlds and investing accordingly will be a fine balance – as will the communications and storytelling effort supporting any path forward. Continuing the sustainability theme, Nomadic survival: An interview with Gaia Vince is a journey from the depths of climate dystopia to the hopeful realization that our migratory instincts could hold the key to some of society’s greatest challenges. It is a unique and thought-provoking take on a well-trodden and, at times, intractable issue.

Filling the void looks back over the various disruptive phases of bank lending and tries to peek around the corner to better understand where private credit might head next. Finally, in The inflection point I look at the disruptive forces bearing down on our industry. This will, of course, affect the various industry players differently depending on size and asset class coverage. However, certain broad lessons can be drawn as forces like the democratization of finance, indexing, AI/technology, and the rise of alternatives play out across the industry.

Perhaps fittingly, this edition also marks a slight disruption to the publication’s name. Following a recent shift to more theme-based editions (e.g., China, sustainable investing, inflation) we felt the Red Thread label more accurately reflected our editorial approach. In tackling topics from many different angles, we try to help readers find a common thread and, ultimately, make sense of important topics and trends that can help people navigate the complex maze of investing.

I hope you enjoy reading this revitalized publication and welcome any feedback.

Barry Gill, Head of Investments, UBS Asset Management

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The Red Thread: The Disruption Edition

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An exploration of disruptive and innovative forces shaping economies and markets.

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