Technology, strategic materials and healthcare are three key themes investors should invest in for the long run, according to Tomasz Godziek, head of thematic equities and portfolio manager at J Safra Sarasin

He told a recent media briefing in Hong Kong that these three elements that can help investors build a diversified portfolio that can hold up in different macroeconomic environments.

“These are the three key building blocks for how we are suggestion to position for the long-term, Godziek said at the briefing.

He favours the technology sector due to its exposure to ongoing trends in artificial intelligence and robotics, which he believes is still attractively valued on a price-to-earnings basis.

“Investors simply don’t believe that this acceleration in earnings growth you see is sustainable,” he said. “Entering this earnings season, there were fears that US hyperscalers will stop spending…but actually they delivered a true ‘mic drop’ quarter.”

“For the first time I think since the launch of ChatGPT, they are showing that they are actually able to significantly monetize AI.”

He also argued that chip manufacturing companies, so-called foundries, will benefit from the need for more chip manufacturing, especially in a world where nations are re-shoring their critical supply chains.

Similarly, strategic materials and commodities also benefit from this ongoing trend of de-globalisation, according to Godziek.

“Strategic materials such as copper, aluminum, rare earth minerals, and so on, they are the major beneficiary of this infrastructure boom,” he said.

“this accelerating demand is meeting very limited supply. So the mining sector has underinvested for the recent 30 years massively, so they cannot just add supply because supply is very inelastic.”

As such, his team projects that for some major strategic materials there will be a significant discrepancy between supply and demand which could lead to a fifth commodity ‘supercycle’.

Finally the last theme of healthcare is attractive due to its defensive properties as well as accelerating growth, in Godziek’s view.

“Healthcare spending is the most defensive spending on the equity market,” he said. “It was the only sector that was able to grow earnings during the global financial crisis, during the Covid crisis and also during the dot-com bubble.”

Yet he believes investors appear to be shunning healthcare stocks given their roughly 9% weight in the MSCI World index despite the sector punching above its weight in terms of its earnings contribution.

“Large pharma companies are approaching the largest patent cliff probably in the history of the sector and as a consequence they will probably start acquiring smaller more innovative biotechs.”

“We already see that this is one of the largest M&A year in the biotech sector ever, and we expect this to accelerate.”