tech breakthrough icon

Technological breakthrough

  • What is the impact of this megatrend?
  • What are the potential implications for the future?
Capital at risk. The value of investments and the income from them can fall as well as rise and is not guaranteed. You may not get back the amount originally invested.
We’re amid a fourth industrial revolution, which will become known as the digital revolution.1
Klaus Schwab, Founder of the World Economic Forum.
The rapid advancement of technology, especially that of artificial intelligence and machine learning, is arguably at the centre of all megatrends.
0 %
of all occupations
could see
0 %
or more of their constituent
activities automated2
 The Impact icon

The Impact

5 examples demonstrating
technological breakthrough:

1. The pace of change is exponential, not linear
The extent and pace of technological change is likely to have wide-reaching implications across almost all industries. People may be replaced with machines, and machines, robotics and AI may learn faster than humans.
Linear growth
30 steps
Exponential growth
30 steps
30 steps doubled each time
Over a billion steps and would circumnavigate the globe a number of times
2. Data is the new oil
Data is the key enabler of this fourth industrial revolution. Indeed, it’s hard to imagine how powerful it could become. Jack Ma, the founder and executive chairman of Alibaba, likens data to the discovery of electricity. He said, “The world is going to be data. I think this is just the beginning of the data period.”3
c
 Information created worldwide = expected to continue accelerating chart
Source: IDC DataAge 2025 Study, sponsored by Seagate (3/17) (Note: 1 petabyte = 1MM gigabytes, 1 zeta byte = 1MM petabytes).
The total amount of global data is expected to increase tenfold by 2025,4 the majority of which will be created and managed by business.
3. Disrupting the labour market
One thing is for sure – the fourth industrial revolution looks set to do more than just disrupt the labour market. Many repetitive jobs can already be done by a machine, but with the rise of Artificial Intelligence, human expertise can now be learned and mastered by a system. Yes, this means that certain jobs will be replaced by machines, but it also means that the potential for new and emerging industries and opportunities is greater than ever before.
4. Data security
Data breaches and hacking episodes are already rife in the connected world - the recent Facebook scandal being a good example of this. With a significant increase in connectivity and potentially billions more insecure devices, data security will be the difference between success and failure for many businesses.
5. Technology start-ups will replace traditional manufacturers
‘Old’ industries like appliance and car manufacturers are facing a serious situation – they either invest in the next era, or risk obsolescence. The CEO of Trimble (US automation company) said that "companies that don’t invest in automation now, will not exist in 5 years’ time”. The race for ‘edge’ through technological advantage is on, and the incumbents will have to fight to hold their position.
The Outlook icon

The Outlook

5 potential implications of this megatrend:

In many respects, when standing on the brink of such significant technological breakthrough, it’s very hard to predict the future. Even policymakers and governments find it almost impossible to keep abreast.
1. The emergence of the ‘Internet of Things’
By the year 2020, our world will be even more connected to the internet. Our cars, coffee machines, fridges and central heating will all be controlled from our tablets and smartphones. To put this into context, Gartner5 estimates that in 2014 there were 7 billion ‘things’ connected by the internet. By 2020, that will rise to 26 billion.
2. Improved standards of living through robotics and AI
As robots and artificial intelligence take on more jobs, costs should decrease, and more people will be able to afford better products. At the same time, dramatic improvements could be made to infrastructure, and transport costs might plummet.
3. Healthcare improvements
People will live longer and better lives, as healthcare technology improves patient outcomes and eradicates certain diseases. This will mitigate some of the issues of long-term care we discussed in the previous chapter.

How do megatrends work?
View our infographic.

'Technological breakthrough' is a catalyst for other trends while also being key to many of the global issues we face.
The interconnectivity that characterises the world today means that none of these megatrends exists in isolation; when trends collide and overlap, new investment themes appear.
To learn more about megatrends, view our infographic below.

Download BlackRock's Megatrend Research Study

An examination of structural shifts in the global economy
  • How are megatrends relevant to investors?
  • 5 megatrends shaping our investment thinking

Investing in themes

We believe there are a number of investment themes that emerge at the intersection of the five megatrends that we have outlined.

Some investors may want to consider employing the skills of an active fund manager to select stocks that provide exposure to a particular theme – as long as they are prepared to pay the associated costs that may come with such investments. Others may want to consider a rules-based approach to thematic investing, whereby a set of rules – rather than a fund manager making an active decision – determine whether a company is connected to a theme or not. Today, investors can benefit from this new, low cost, approach to thematic investing.

Capital at risk. All financial investments involve an element of risk. Therefore, the value of the investment and the income from it will vary and the initial investment amount cannot be guaranteed.

View the BlackRock active
equity thematic fund range

Click on the icons below to find out more and see our related funds

  • New energy

    New energy

  • Next generation technology fund

    Next generation technology

  • FinTech

    FinTech

  • Future of transport

    Future of
    transport

For further information on active equity thematic investing, please click here to
read our range brochure.

This material is not intended to be relied upon as a forecast, research or investment advice, and is not a recommendation, offer or solicitation to buy or sell any financial instrument or product or to adopt any investment strategy.