Independent Pilots Financial Services is part of the Benchmark Capital Group, backed by FTSE 100 company Schroders. Our investment committee often draws upon Schroders vast resources. This piece is written by one of their investment writers.
Five Schroders fund managers reveal the main ways they expect Covid-19 to change the way we live and work.
The coronavirus pandemic is acting as a catalyst, accelerating a number of trends, such as an increase in the number of people working from home and higher levels of e-commerce. Whilst some of the impacts of Covid-19 will be temporary, there is a growing sense that we are now at a pivotal moment and many of the changes will become permanent.
We spoke to five fund managers to find out what they think will be the most significant long-term impact of Covid-19.
Robin Parbrook is a fund manager specialising in Asian equities
“Covid-19 is going to have a number of significant impacts on how we live and work. This is more of an acceleration of trends that were already there, rather than a sudden change in behaviour. This could include the end of the 9-5 working week, the end of office life as we know it. If not our children, then certainly our grandchildren, will find it very peculiar that anyone would choose to get on a packed train at 8.30 in the morning to go and work in an office with thousands of other people when you didn’t actually need to. During the current crisis, Schroders has 98% of its workforce working very successfully from home. The technology to do this has been there for some time, Covid-19 merely accelerated the process.
“The other key change will be the return of “big” government. The only way to get out of this hole is to spend money and government expenditure is going to come back to the fore. Big government is back and governments are going to play a much bigger role in society, whether we like it or not. As someone who can remember the 1970s, I’m not too keen on this idea. However, younger generations, such millennials and Generation Z seem quite open to this change.”
Alex Tedder runs the global equities team and specialises in disruption
“Covid-19 is going to act as a catalyst for automation. This was already happening before the outbreak of the virus, particularly in parts of Asia, and now there will a rapid adoption of automation in areas that previously haven’t been automated, such as the service sector. You will see a lot more artificial intelligence (AI) than we currently have. This is something that I’m very excited about and something that is significantly underestimated by the market today.
“During the current crisis technology has really come to the fore. We have had to use it and it’s actually worked really well, which for me is tremendously positive. Adoption rates in areas of technology such as communications, e-commerce, automation and remote healthcare soared during the pandemic because we didn’t have any other options. These trends are all set to accelerate further once the pandemic is under control and there is a huge amount of growth potential in these areas.”
John Bowler is a fund manager and specialises in healthcare innovation
“The Covid-19 pandemic has shone a light on the growing importance of technology for the healthcare sector. During the crisis, telehealth (the distribution of healthcare-related services via electronic devices such as smart phones and laptops) has been essential. These services are not only providing better patient outcomes, but are doing so in a more cost effective manner. And while these technologies were available before the pandemic, Covid-19 has accelerated their take up, which will undoubtedly continue once the crisis is under control. We are now at a positive inflection point where we will start to see genuine innovation and advancement across the sector.
“Patients are now experiencing the benefit and convenience of online consultations with doctors, and healthcare providers are also realising the benefits as they replace lost income from cancelled face-to-face consultations with virtual consultations. I believe we are at the start of a transformational shift in knowledge and technology. Increased use of digital health services will also serve to democratise the management of healthcare and well-being, providing individuals with the tools and data to take greater responsibility for their own personal health.”
Tom Walker is a fund manager, specialising in global cities
“Technology has allowed huge numbers of people to work from home during the current lockdown, supplanting the need to be in an office on a daily basis. As such, we envisage that there will be fewer people who work in the knowledge economy travelling into city centres each day. Although the urban core will still be vital to the effective running of a global city’s economy, office buildings in secondary locations, outside of the urban core, will be most at risk of being repurposed. With higher numbers of people working from home, it will make no sense for businesses to maintain these type of offices.
“The way we use buildings in global cities will change. However, this is nothing new. In London, for example, old warehouses by the side of the Thames that were once used for storing commodities brought to the city’s port by ship, have been repurposed as high-end luxury housing. Covid-19 has accelerated the move to online shopping and data centres and warehouses are increasingly replacing the need for shopping malls in many cities. Most companies will prioritise their offices in the most connected locations or use flex office alternatives. This was already happening as flexible working ensured only the best connected offices remained relevant.”
Isabella Hervey-Bathurst is a fund manager who specialises in climate change
“Covid-19 has led many businesses to re-evaluate their priorities. People are working from home where they possibly can and meetings and conferences have become virtual ones, This crisis will make businesses re-evaluate the necessity of what they would previously have considered “business as usual” practices. And this could just be the start. We think it is quite possible that we could see some more permanent changes in how we work, and that could be good for the climate.
“Climate-focused investments are no longer as dependent on policy support as they were a decade ago. However, that support remains important in accelerating progress, particularly in areas such as heavy industry where the economics of decarbonisation technologies are not yet compelling without regulatory intervention. We are hopeful that the current crisis could prove the springboard for the climate transition that scientific consensus tells us is becoming increasingly urgent.”