ASX exchange-traded fund (ETF) provider Global X has named the three investment "megatrends" that it expects to play out in 2024.
They are artificial intelligence (AI), uranium shares, and emerging markets.
In an article published on Friday, Marc Jocum from Global X said thematic ETFs provided a great way to invest in megatrends with less risk.
He commented:
Predicting what will happen in the short-term is challenging given the constantly evolving market environment.
However, if investors extend their time horizons to multiple years, they can be prepared for a future marked by long-term structural shifts known as "megatrends".
Jocum said megatrend investing was all about long-term thematics. He said the idea was to invest in powerful, potentially transformative global trends that are set to play out over years and decades.
ASX ETFs and the 3 investment megatrends of 2024
Artificial intelligence
Jocum said ChatGPT was a catalyst for investor interest in AI in 2023, but it had only scratched the surface.
He commented:
AI is at a crucial juncture in its adoption cycle … Global X believes sales growth across the AI category can potentially exceed 50% in the year ahead, well above the 5% sales growth expected in the broader share market.
The addressable market for AI services, including the full ecosystem of hardware, software, and data, is set to expand in the coming years, estimated to grow by double digits to $1.6 trillion by 2028.
Jocum said identifying individual stocks set to benefit from the AI trend was difficult. He said some companies may not be able to leverage AI capabilities without undermining traditional revenue streams.
For diverse exposure to this megatrend, investors may consider exploring exchange traded funds (ETFs) that track a basket of artificial intelligence benefactors, semiconductor companies or technology stalwarts.
ASX ETFs offering exposure to the AI megatrend include:
| ASX ETF | Share price | Growth over 12 months |
| Global X Robo Global Robotics & Automation ETF (ASX: ROBO) | $74.10 | 8.5% |
| Betashares Global Robotics and Artificial Intelligence ETF (ASX: RBTZ) | $13.41 | 26.5 |
Uranium and ASX ETFs
Jocum explained that nuclear energy had become a key element in the world's green energy transition.
He said:
At the 2023 United Nations Climate Change Conference (known as COP28), a declaration was signed among 22 countries to triple nuclear energy capacity globally by 2050.
It also invited international financial institutions (such as the World Bank) to encourage the inclusion of nuclear energy in lending policies.
The uranium price has skyrocketed by 112% over the past 12 months to US$106 per pound on Friday.
Many countries are building nuclear reactors to supplement their domestic energy supply.
Miners are firing up uranium assets that were previously on care and maintenance for years.
Jocum said:
An important distinguishment between a 'fad' and a long-term structural theme is whether there are strong governmental or institutional initiatives.
Considering climate change is at the front of minds for global nations, combined with favourable momentum in public and private markets, the uranium industry is positioned to grow …
He said Australia has lots of uranium but only delivered 8% of global production. This is because mining is banned in most states.
He commented:
Investors wanting to get exposure to the uranium decarbonisation theme should expand their investment universe to consider global players …
As uranium lacks a liquid spot market like gold and copper, investors could consider investing in an ETF tracking a broad range of global companies involved in uranium mining and the production of nuclear components.
ETFs offering exposure to the uranium megatrend include:
| ASX ETF | Share price | Growth over 12 months |
| Global X Uranium ETF (ASX: ATOM) | $17.14 | 57.8% |
| Betashares Global Uranium ETF (ASX: URNM) | $11.03 | 73.7% |
Emerging markets
Jocum said China's economic weakening in 2023 had led to a changing of the guard in emerging markets:
… investors are looking past China, with eyes locked on India as the bright star of emerging markets.
In Global X's opinion, India has emerged as one of the better structural opportunities backed by significant economic, social and political drivers. This changing of the guard in the emerging market leader is a monumental shift in the investment landscape.
Jocum said that 10 years ago, India accounted for just over 5% of the emerging markets sector. That has now tripled to 16%. By contrast, China's market share has contracted by a third since the pandemic.
Jocum said global companies like Apple Inc (NASDAQ: AAPL) were diversifying their supply chains from China to India. This could lead to further infrastructure development and economic growth.
Traditionally, Australian investors looking for exposure to India had to invest through instruments like mutual funds as many brokers cannot access Indian equities.
However, with the average Indian mutual fund charging 1.2% in fees and the fact that most active funds underperform the market over the long-term, investors can look to pay a fraction of the cost and get exposure to an Indian share market index like the NIFTY 50.
ETFs offering exposure to the emerging markets megatrend include:
