MEGATRENDS OWN THE FUTURE - BlackRock
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MEGATRENDS
OWN THE FUTURE
ICRMH0720U-1254309-1/44The modern world is changing at the
speed of innovation
1 billion…
…hours ago …seconds ago …Google searches
humanity emerged IBM released the first PC occurred this morning 1
1 Source: All 3 “billion” stats: (2013) Hal Varian, “Beyond Big Data”.
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2Structural > cyclical
Structural themes are long-term opportunities driven by
powerful transformations in our economy and society
Structural
themes
Cyclical
themes
Growth
Time
For illustrative purposes only.
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3Structural theme:
horses
vs. cars
ICRMH0720U-1254309-4/44
4From 1905-1930,
the number of
horse-drawn
carriages fell
93%
Source: International Monetary Fund (IMF) Riding the Energy Transition, May 2017.
ICRMH0720U-1254309-5/44
5Televisions in U.S.
households
0.01
19461
%
1 "1920s-1960s Television", Elon University School of Communications.
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6Televisions in U.S.
households
83 %
19581
1 "Number of TV Households in America", Buffalo History Museum.
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7Years new
1876
technology takes Telephone
35 years
to reach 1/4 of
American
population1
1975
4 years
PC
16 years
2004 – 1991
Facebook
The Web
7 years
1 Source: Pew Research Chart of the Week: The ever-accelerating rate of technology
adoption; Yahoo Finance for number of active users at Facebook over the years.
References to specific companies are strictly for illustrative purposes only and should
not be construed as investment advice or recommendations regarding those
companies. For holdings information for the iShares funds, please visit
www.iShares.com.
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8The Goldilocks
problem
ICRMH0720U-1254309-9/44
9F–A–A–N-G
Source: Pew Research Chart of the Week: The ever-accelerating rate of technology adoption; Yahoo Finance for number of active users at Facebook over the years. References to specific companies are strictly for illustrative purposes onl y
and should not be construed as investment advice or recommendations regarding those companies. For holdings information for t he iShares funds, please visit www.iShares.com.
ICRMH0720U-1254309-10/44
10Can you spot the FAANG?
Two “pure-play” e-commerce names had very different charts in 1999
May 19, 1999 to November 30, 1999
Company A
up 213%
Company B
up 22%
5/99 6/99 7/99 8/99 9/99 10/99 11/99
For illustrative purposes only.
Source: Bloomberg, December 2019.
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11Can you spot the FAANG?
They’re even more different 20+ years later
Growth from May 19, 1999 to May 30, 2020
Amazon gave investors a
34x return
1
eToys filed for
bankruptcy
2
5/99 5/03 5/07 5/11 5/15 5/19
For illustrative purposes only.
Source: Bloomberg, May 2020 1 Amazon total return was 3,400% between 05/19/1999 and 05/31/2020. Includes dividends. 2 eToys filed for bankruptcy in February, 2001.
References to specific companies are strictly for illustrative purposes only and should not be construed as investment advice or recommendations regarding those companies. For holdings information for the iShares funds, please visit
www.iShares.com.
ICRMH0720U-1254309-12/44
12What about a tech focused index?
Nasdaq
Too broad
Broad indexes may be too
diversified to offer targeted
thematic exposure.
3x returns1
NASDAQ
Composite Index
Broad Tech Index
May-99 May-03 May-07 May-11 May-15 May-19
For illustrative purposes only. Source: Bloomberg., May 2020 .
1 Nasdaq returned 309% between 05/19/1999 and 05/31/2020.
Index performance is for illustrative purposes only. Index performance does not reflect any management fees, transaction cost s or expenses. Indexes are unmanaged and one cannot invest directly in an index. Past performance does not
guarantee future results.
ICRMH0720U-1254309-13/44
13The Goldilocks
scenario
Broad Index
Megatrend Lack targeted exposure
Index
Focused Exposure
Single stocks
Increased risk
Lack diversification
23x
returns 1
3x
returns1
?? MSCI ACWI Internet &
Direct Marketing Retail Index
Targeted Index
Nasdaq Composite Index
Broad Tech Index
returns1
1 Reflects total returns, including dividends, from 09/15/99 through 05/31/20. Data from Bloomberg as of May 2020. The MSCI AC WI Internet & Direct Marketing
Retail Index has returned 2,342% and the Nasdaq Composite Index has returned 326% over this time period. Index performance is for illustrative purposes only.
Index performance does not reflect any management fees, transactions costs or expenses. Indexes are unmanaged and one cannot invest directly in an index.
Past performance does not guarantee future results.
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14T–R–E–N-D
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15It’s on the tip
of your tongue
Are self driving
cars cool?
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16And the top of
your Twitter
Will there be
more of them
on the road in
10 years?
ICRMH0720U-1254309-17/44
17At a tipping point
Regulatory, societal and economic forces are tailwinds for long-term,
secular trends
Regulatory
Societal
forces
Economic
For illustrative purposes only.
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18At a tipping point
Regulatory, societal and economic forces are tailwinds for long-term,
secular trends
Regulatory In China, the number of all-electric Beginning January 1, 2021 new
vehicle sales is expected to grow vehicles sold in the EU must emit
Societal
4x
from 2019 to 20251
25%
less CO2 per km driven2
Economic
For illustrative purposes only. Forecasts may not come to pass. Source: 1 Los Angeles Times, "China EV Makers", September 2019. 2 January 2018, WSJ, June 2019, William Boston.
ICRMH0720U-1254309-19/44
19At a tipping point
Regulatory, societal and economic forces are tailwinds for long-term,
secular trends
Regulatory
of U.S. consumers age
Societal 80% 18-34 are willing to pay
more for EVs/Hybrids1
Economic
For illustrative purposes only. Forecasts may not come to pass. Source: 1 WardsAuto, February 2019, Steven Finlay.
ICRMH0720U-1254309-20/44
20At a tipping point
Regulatory, societal and economic forces are tailwinds for long-term,
secular trends
2010
Regulatory
Societal
Cost of EV batteries
$1,160
continues to decline 2018
Economic $176
Forecasts may not come to pass. Source: BloombergNEF. For illustrative purposes only.
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21Megatrends are driving change
Megatrends are the long-term, transformational forces driving our global economy & society.
Technological Demographics & Climate change & Emerging global
Rapid urbanization
breakthrough social change resource scarcity wealth
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22Technological
breakthrough
ICRMH0720U-1254309-23/44
23What would you rather
sacrifice for one week?
OR
ICRMH0720U-1254309-24/44
24Drumroll please…
49 %
willing to
give up dessert
74 %
willing to
give up alcohol
Source: Delvv, Digital Habits 2016 Survey Findings, June 2016.
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25Internet-connected devices
2025 75bn
2023 50bn
2021 35bn
2019 28bn
2017 20bn
2015 15bn
Source: Statista, Internet of Things (IoT) Connected Devices Installed Base Worldwide from 2015 to 2025. For illustrative purposes only.
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26More data more problems
# of Cybercriminals
on the FBI’s most
wanted list
(in millions)
1
in 2014
71
in 2020
Source: ITRC, 2017 ITR Annual Data Breach Year-End Review, as of February 2018. For illustrative purposes only.
ICRMH0720U-1254309-27/44
27MegaRule #1: Weight for tomorrow
The top 5 companies in the S&P 500 has changed over time, with only Microsoft retaining its spot.
What will the next 20 years look like?
2000 2020 2040
?
S&P 500 Weight S&P 500 Weight
Microsoft Microsoft
General Electric Apple
Cisco Amazon
Walmart Facebook
Intel Berkshire Hathaway
Source: Bloomberg, data as of 01/01/2000 and 01/01/2020. References to specific companies are strictly for illustrative purposes only and should not be construed as investment advice or recommendations regarding those companies.
For holdings information for the iShares funds, please visit www.iShares.com.
ICRMH0720U-1254309-28/44
28Demographics
& social change
ICRMH0720U-1254309-29/44
29Longer, healthier lives
The 60+ demographic is rapidly increasing U.S. healthcare spending continues to rise
In 2015 In 2025 In 2017 In 2027
1B
Over 60
2B
Over 60
4T
Spent on
6T
Spent on
national national
healthcare in healthcare in
the U.S. the U.S.
Sources: Left side: United Nations World Population Prospects: the 2017 Revision. Right side: Center for Medicare and Medicaid Services..
ICRMH0720U-1254309-30/44
30Seek to do well
& do good
Genomics
Using an individual’s DNA to tailor
medical treatment
Did you know?
The first whole human genome sequencing cost
~2.7B in 2003. Today it costs $699.1
Immunology
Using the body’s immune system to
fight disease
Did you know?
With over 32 FDA approvals and rising,
immunotherapy is already boosting lung, renal,
brain and skin cancer survival rates.2
Sangamo
ZIOPHARM
Novartis Moderna, Inc. Therapeutics,
Oncology, Inc.
Inc.
Sources: 1 Dante Labs, March 2018, Andrea Riposati.
2 https://www.cancerresearch.org.
References to specific companies are strictly for illustrative purposes only and should
not be construed as investment advice or recommendations regarding those
companies. For holdings information for the iShares funds, please visit
www.iShares.com.
ICRMH0720U-1254309-31/44
31Rapid
urbanization
ICRMH0720U-1254309-32/44
32Rise of the megacities
Population growth of the world’s megacities through 2030
Delhi
Cairo +9 million (37%)
+5 million (27%)
39M
26M
Los Angeles
New York
+1 million (6%)
+1 million (6%)
Shanghai
+7 million (28%)
13M 20M
Dhaka 33M
+9 million (43%)
Sao Paulo
+2 million (10%) 28M
24M
Source: United Nations Department of Economic and Social Affairs, The World’s Cities in 2018.
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33ONE Megacity, FIVE Megatrends
Technological Climate change &
breakthrough resource scarcity
Cities will invest $41 trillion Over 100 cities worldwide
through 2036 to leverage are now powered primarily
the internet of things1 by renewable energy.4
Demographics Emerging
& social change global wealth
Eight in ten U.S. residents 65 440 EM cities will make up
and older live in metropolitan half of GDP growth between
areas.2 2010 and 2025.5
Rapid
urbanization
MTA is spending $22b more
on infrastructure upgrades
over the next five years.3
For illustrative purposes only. 1 CNBC, "Spending on smart cities around the world", October 2016 . 2 MarketWatch, "What these age forward cities are doing for older residents", October 2019. 3 WSJ, "MTA wants to spend $55B to improve
your commute", September 2019. 4 Inside Climate News "More than 100 cities worldwide now powered primarily by renewable energy", February 2018. 5 McKinsey, "Unlocking the potential of emerging market cities", September 2012.
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34Climate change
& resource
scarcity
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35$2T gap to meet gov’t renewable targets
Asia Africa Latin Middle
East
$225B America $30B
Almost $1.1T $218B
2T
total investment
U.S.
$16B
needed by 2030 for
the implementation
of renewable energy
targets.
Others
$151B
Source: International Renewable Energy Agency, Untapped potential for climate action: Renewable energy in Nationally Determin ed Contributions, November 2017.
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36MegaRule #2: Connect the value chain
For illustrative purposes only.
F or illustrative purposes only.
The specific companies identified and described above do not represent all of the companies purchased or sold, and no assumptions should be made that the companies identified and discussed were or will be profitable. For top 10
holdings please see back of presentation.
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37Emerging
global wealth
ICRMH0720U-1254309-38/44
38A billion people
here, a billion
people there…
2 China mints billionaires
per week. 1
150M people enter the global
middle class every year, of which
90% are from Asia.2
44
people escape
extreme poverty in India
every minute. 3
Source: 1 Yahoo Finance, “Billionaires Insight” report from UBS and PWC. 2
Bank of America Merrill Lynch “10 things for the next 10 years.” 3 Washington
Post, “India is no longer home to the largest number of poor people in the world.
Nigeria is.”
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39MegaRule #3: Think beyond borders
China’s
vast digital
potential
Online vs. offline population in
China compared to the United
States in 2018
Online Population: 292M 772M
Offline Population: 35M 628M
Source: Circle ID, July 2018.
ICRMH0720U-1254309-40/44
40Owning the future
Technological Demographics & Rapid Climate change & Emerging global
breakthrough social change urbanization resource scarcity wealth
Robotics & A.I. Genomics Infrastructure Clean energy China & India
Cybersecurity Immunotherapy Megacities Electric vehicles New consumers
FinTech Ageing Smart cities Self-driving Digital economy
ICRMH0720U-1254309-41/44
41MegaRules of
the road
1 Weight for
tomorrow
2 Connect the
value chain
3 Think beyond
borders
ICRMH0720U-1254309-42/44
42Put your money
where your
mind is…
ICRMH0720U-1254309-43/44
43Important Information
Carefully consider the Funds' investment objectives, risk factors, and charges and expenses before investing. This and other
information can be found in the Funds' prospectuses or, if available, the summary prospectuses which may be obtained by
visiting www.iShares.com or www.blackrock.com. Read the prospectus carefully before investing.
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other developments. These risks often are heightened for investments in emerging/developin g markets and in concentrations of single countries.
Funds that concentrate investments in specific industries, sectors, markets or asset classes may underperform or be more vola tile than other industries, sectors, markets or asset classes than the general
securities market.
Technology companies may be subject to severe competition and product obsolescence. Technologies perceived to displace older technologies or create new markets may not in fact do so. Companies that
initially develop a novel technology may not be able to capitalize on the technology.
This information should not be relied upon as research, investment advice, or a recommendation regarding any products, strategies, or any security in particular. This material is strictly for illustrative,
educational, or informational purposes and is subject to change. The strategies discussed are strictly for illustrative and educational purposes and are not a recommendation, offer or solicitation to buy or sell
any securities or to adopt any investment strategy. There is no guarantee that any strategies discussed will be effective.
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upon as such. Any opinions expressed in this material reflect our analysis at this date and are subject to change. The information and opinions contained in this material are derived from proprietary and
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