Here Are Four Areas the $311 Billion CPPIB Investment Fund Thinks Will Be Impacted by COVID-19 – ProWellTech

The Canadian Pension Plan Investment Board, a wealth manager that controls approximately $ 311 billion in assets for Canada retirees and retirees, has identified four key sectors that are set to undergo massive changes following the global economic response to the COVID-19 pandemic.

The company expects the massive changes in e-commerce, healthcare, logistics, and urban infrastructure to remain in place for a long period of time, and as a result urges investors to rethink their approaches to each.

"I"It really ties into the mandate we have on thematic investing," said Leon Pedersen, head of thematic investing at CPPIB.

The company recognized that structural changes were taking place and that there was value to the fund manager in ensuring that the changes were addressed across its broad investment portfolio. "We have a long-term mandate and we have a long-term investment horizon, so we can afford to think long-term in our investment outlook," Pedersen said.

The Thematic Investments group within CPPIB will make mid-, small-cap and private investments in companies that reflect the company's long-term arguments, according to Pedersen. So not only does this survey indicate where the company sees certain sectors going, it is also a sign of where CPPIB could commit investment capital.

The research, selected from international surveys with over 3,500 respondents and intense conversations with investment professionals and the firm's portfolio companies, indicates that there is likely a new baseline in the use of e-commerce that will continue to drive the growth among companies offering mixed retail offerings and that offices will likely never return to being full-time occupied by every employee in the company.

CPPIB has already invested in companies such as Fabric, a warehouse automation and management company.

The e-commerce wave has collapsed, but the tide may turn

Among the good news for ecommerce companies is a word of warning for companies in the online shopping industry. While usage jumped to 31% of US households, up from 13% in August, consumers gave the service poor ratings and many grocers are actually losing money on online orders. The online move has also favored larger omnichannel providers like Amazon and Walmart, the study found.

The CPPIB also found that there may be opportunities for brick and mortar sellers in the aftermath of the outbreak. As younger consumers return to the mall, they will find fewer retailers available, as bankruptcies are coming to both the US and Europe. This could open the door for the emergence of new brands. Meanwhile, in China, more consumers are moving offline with shopping malls growing and customers returning to malls.

Some of the biggest winners will actually be online entertainment and cashless payments, as fewer stores accept cash and streaming music and video are lower-risk and easier options than live events or cinemas.

Health care goes digital and privacy is more important than ever

According to the CPPIB, consumers in the West, already reluctant to hand over personal information, have become even more sensitive to the government's processing of their information despite the public health benefits of monitoring and traceability. In Germany and the United States, half of consumers said they had concerns about sharing their data with the government or companies, compared with less than 20% of Chinese respondents.

However, even as people are more reluctant to share personal information with governments or companies, they are becoming more willing to share personal information on technology platforms. One-third of the patients who used telemedicine services in the United States during the pandemic did so for the first time. And about twenty percent of the nation had a telemedicine consultation during the year, according to data from the CPPIB.

Experience enhancing technologies are likely to work well, due to people who have tried telemedicine, service satisfaction levels have dropped.

Cities and infrastructure will change

"From mass transportation to public gatherings, few areas of urban life will be left unmarked by COVID-19," write the authors of the CPPIB report.

Remote working will accelerate by drastically changing the complexion of downtown environments as the breadth of services on offer will spread to the suburban communities where residents flock. According to CPPIB data, about half of workers in China, the UK and the US worked from home during the pandemic, up from 5% or less in 2019. In Canada, four out of ten Canadians were telecommuting.

To this end, the CPPIB sees opportunities for companies to enable remote working (including security, collaboration and productivity technologies) and automate business practices. On the flip side, for those workers who remain married in the office by natural necessity or inclination, there will be a need for cleaning and hygiene services and someone will have to provide some specific tools for COVID-19.

With personal space at a premium, public transportation and travel calling are also expected to take a hit, according to the CPPIB report.

Supply chains become the links that bind in a distributed virtual world

As more aspects of daily life become socially distanced and digital, supply chains will take on an even more central position in the economy.

"Between rising labor costs and rising geopolitical risk, companies today are focusing on resilience," write the CPPIB authors.

Companies are re-evaluating their dependence on Chinese manufacturing as political pressure is coming from multiple regions on Chinese suppliers thanks to the internment of the Uighur population in Xinjiang and the crackdown on Hong Kong's democratic and open society. According to CPPIB, India, Southeast Asia and regional players such as Mexico and Poland are best placed to benefit from this supply chain diversification. Vendors of supply chain management software and robotics and automation services will benefit.

"Confined to their homes for months and subject to a rapid reorganization of perceived health risks and economic prospects, consumers are emerging from a shared trauma that will change their priorities and concerns for years to come," the authors of the report write. CPPIB study.