A JPMorgan asset manager with $135 billion to play with tells us the 3 areas of the market that excite him the most
- Malcolm Smith is head of a group of which manages $135 billion of assets at JPMorgan Asset Management.
- Smith told Business Insider the areas of the market he is looking at for opportunities.
- They tend to be those being heavily influenced by disruption and technology.
- Retailers, automakers, and commodity firms are of particular interest to him.
LONDON - Technological advances and disruption are the key trends that stock investors should be focusing on, according to one of JPMorgan Asset Management's most senior equity managers.
"Most of the areas we are talking about in terms of opportunity are those where there's disruption," Malcolm Smith, who oversees JPMorgan Asset Management's $135 billion international equity group, a major part of the $1.7 trillion business, told Business Insider in an interview.
Smith singled out three industries where this disruption presents the strongest opportunities for investors, and where he is currently focusing his attention - automotive, retail, and commodities.
When it comes to autos, Smith said he is focusing on the debate around electric vehicles, and more broadly alternate fuel technologies in general.
Electric vehicles have become more widely available over the last decade, but still only make up around 1% of the global auto market. That is set to increase as time goes on, and the companies that can take advantage of changing market dynamics are likely to reap the benefits.
Numerous traditional automakers now manufacture electric vehicles, including Nissan, BMW, and Chevrolet to name just three. Elon Musk's Tesla, probably the most recognisable pure play electric automaker is on the brink of becoming a mainstream manufacturer - another factor disrupting an industry that for a long time has been dominated by a handful of huge companies.
In retail, Smith believes the key issues are those of "bricks versus clicks, and how consumption patterns will change over time."
The biggest shift in retail is that of shoppers moving away from doing their shopping in bricks and mortar stores, and towards online purchases.
Data from Barclays at the end of last year showed that 29% of all shopping done by credit/debit card is done online in the UK, compared to just 17% in 2011.
Online shopping is gaining more than one percentage point of market share per year. It suggests that by about 2030, half of all purchases of all kinds made by card will be done online.
The major players in the retail space are also changing rapidly. In Britain alone, many traditional retailers that struggled to keep up with the rate of change in the industry have already perished, with both electronics retailer Maplin, and kids paradise Toys R Us going bust in the last week alone. That follows high profile casualties like BHS and Jaeger in 2017.
Meanwhile, Amazon's groundbreaking deal to buy Whole Foods last year has the scope to change the grocery space forever. That deal was singled out by Smith as one of particular interest when looking at the retail space.
Finally, Smith said, technological advances in the commodities sector are an area of opportunity for investors right now.
"If you think about shale oil, horizontal drilling, and fracking have changed the oil market into somewhat more of a regional market in some instances. In the US in particular it has changed the face of the energy market," he said.
Concluding, Smith noted that "the obvious common denominator in all of them is technology."