General Motors (GM)
Once the largest automotive manufacturer in the world, General Motors (GM) today remains the largest U.S. carmaker, producing more than 8.3 million cars and trucks annually. The company traces its roots back to the Durant-Dort Carriage Company, which was the country’s leading manufacturer of horse-drawn vehicles by 1904, when it merged with the Buick Motor Company to take on the then-new market for gas-powered vehicles. By 1962, more than half of all cars sold in the U.S. were produced by General Motors.
Today the company, headquartered in Detroit, designs, manufactures, markets, and distributes vehicles and vehicle parts, in addition to financial services. It has facilities in 37 countries and owns brands including Chevrolet, Buick, GMC and Cadillac, as well as overseas brands such as Holden, Wuling, Baojun and Jiefang.
GM’s worldwide sales volume reached 10 million vehicles in 2016 and the company reported $147 billion in revenue in 2018.
Rationale
A direct way to gain exposure to General Motors is to buy the listed shares. But that can be a risky approach, given GM’s bumpy business history and the current state of the U.S. auto industry as a whole. GM famously declared bankruptcy in 2009 following years of declining sales and was later bailed out by the government in 2014 through the Troubled Asset Relief Program.
A solution that can dampen some of that volatility is to buy funds that provide exposure to General Motors and other similar firms, rather than GM shares themselves. After all, the return drivers that will benefit GM might also benefit other similar firms in automotive, manufacturing, and financial services. As investment management is gradually moving to the construction of portfolios using ETFs and mutual funds in addition to single stocks, investors would do well to consider gain exposure to firms like GM through these types of funds.
Investing in GM
A search on Magnifi suggests that investors can gain access to GM via a number of different funds and ETFs, including those shown below.
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This blog is sponsored by Magnifi. The information and data are as of the publish date unless otherwise noted and subject to change. This material is provided for informational purposes only and should not be construed as individualized investment advice or an offer or solicitation to buy or sell securities tailored to your needs. This information covers investment and market activity, industry or sector trends, or other broad-based economic or market conditions and should not be construed as investment research or advice. Investors are urged to consult with their financial advisors before buying or selling any securities. Although certain information has been obtained from sources believed to be reliable, we do not guarantee its accuracy, completeness or fairness. Past performance is no guarantee of future results. This content may not be reproduced or distributed to any person in whole or in part without the prior written consent of Magnifi. [As a technology company, Magnifi provides access to tools and will be compensated for providing such access. Magnifi does not provide broker-dealer, custodian, investment advice or related investment services.
Tesla (TSLA)
Few companies capture the spirit of innovation as it exists today as Tesla (TSLA), the California-based maker of electric cars, advanced battery systems, solar panels and other world-changing inventions. Founded in 2003 by engineers Martin Eberhard and Marc Tarpenning, Tesla was soon thereafter joined by current CEO Elon Musk, who invested in the company’s Series A round.
And the rest is history.
As of 2019, Tesla is producing three models of its all-electric vehicles — the Model S liftback sedan, the Model X SUV, and the Model 3 affordable sedan — and has new versions in development including the Model 3 crossover SUV, Roadster sports car and the Semi battery powered Class 8 semi-trailer truck. The company also produces solar panels and solar roof tiles via its SolarCity subsidiary, as well as whole-home rechargeable lithium ion battery systems the Powerwall and Powerpack and the Megapack, a Lithium-ion grid energy storage battery.
As of 2018, Telsa controlled 12% of the global market for plug-in electric passenger cars, with more than 245,000 vehicles delivered, making it the world’s best selling builder in its category.
Rationale
A direct way to gain exposure to Tesla is to buy the listed shares. However, this can be a volatile approach, given the company’s early stage and ongoing growing pains. A solution that can dampen some of that volatility is to buy funds that provide exposure to Tesla and other similar firms, rather than TSLA shares themselves. After all, the return drivers that will benefit Tesla might also benefit other similar firms in their industry, including those making electric vehicles as well as components and infrastructure for the industry.
As investment management is gradually moving to the construction of portfolios using ETFs and mutual funds in addition to single stocks, investors would do well to consider gain exposure to firms like Tesla through these types of funds.
Investing in TSLA
A search on Magnifi suggests that investors can gain access to Tesla via a number of different funds and ETFs, including those shown below.
Schedule a demo and unlock
a 14-day free trial of Magnifi Pro+
Magnifi is changing the way we shop for investments, with the world’s first semantic search engine for finance that helps users discover, compare and buy investment products such as ETFs, mutual funds and stocks. Try it for yourself today.
This blog is sponsored by Magnifi. The information and data are as of the publish date unless otherwise noted and subject to change. This material is provided for informational purposes only and should not be construed as individualized investment advice or an offer or solicitation to buy or sell securities tailored to your needs. This information covers investment and market activity, industry or sector trends, or other broad-based economic or market conditions and should not be construed as investment research or advice. Investors are urged to consult with their financial advisors before buying or selling any securities. Although certain information has been obtained from sources believed to be reliable, we do not guarantee its accuracy, completeness or fairness. Past performance is no guarantee of future results. This content may not be reproduced or distributed to any person in whole or in part without the prior written consent of Magnifi. [As a technology company, Magnifi provides access to tools and will be compensated for providing such access. Magnifi does not provide broker-dealer, custodian, investment advice or related investment services.
Military & Defense
How to Invest in the Future of Military Technology
It’s been said that the only guarantees in life are death and taxes, but there is another fact of life that has remained constant for much of human history: war. For millennia, people have fought with one another — over land, over titles and even over resources — and these conflicts eventually lead to the development of new weapons, military technologies and a worldwide industry dedicated to supporting these efforts.
We saw it around 400 BC, when Athens and Sparta, two of the most powerful city-states in ancient Greece, went to battle with each other in the Peloponnesian War.
We saw it again during the Roman conquest of Britain, which lasted until 400 AD.
And, of course, we saw it more recently during the American and French Revolutions in the 18th century.
In each of these instances, the outcome of these wars not only radically shifted the world’s power structure at the time, they also led to the development of new weapons and tactics. Battles that had once been fought with rocks and spears eventually moved on to bronze swords and arrows, then primitive cannons and firearms, to aircraft, today’s drones and more.
Over the last 3,000 years, the entire concept of war has evolved and today the military and defense industries are among the largest and most profitable on the planet. According to the Aerospace Industries Association (AIA), the U.S. aerospace and defense industry generated a total of $62.6 billion in federal and state tax receipts in 2015, the most recent year that data is available. That figure was up 2.9% from $60.9 billion in 2014 and $60.6 billion in 2013.
[Today’s warfare is virtual as well. Here’s what you need to know about Cybersecurity]
Overall, the defense industry posted more than $604 billion in sales in 2015, with end-use buyers (such as militaries, defense contractors and others) accounting for 58% or $349 billion of that total, followed by the industry’s supply chain (parts suppliers going to larger manufacturers) with the remaining 42% or $256 billion. Direct sales brought in an additional $181 billion in the U.S. alone.
By 2018, defense spending totaled $622 billion, accounting for about 3.1% of U.S. GDP.
And military technology is a strong job creator as well. Per the AIA report: “The U.S. Aerospace and Defense (A&D) industry is the world’s leading innovator and producer of technologically advanced aircraft, space and defense systems and supports one of the largest high-skill and high-wage workforces in the nation. Indeed, in 2015, the U.S. A&D industry supported nearly 1.7 million jobs in companies producing products and services for the industry’s commercial aerospace and defense manufacturing sectors. Of the jobs supported, 697,000 or 42 percent, were attributable to firms producing end-use goods and services, such as aircraft, space systems, land vehicles, ships and armaments, while 965,000, or 58 percent were attributable to the industry’s extensive supply chain. Combined, these jobs accounted for approximately two percent of the nation’s total employment base and 13 percent of the nation’s manufacturing workforce.”
What Is the Defense Industry?
At the highest level, Webster’s dictionary defines the term “military” as anything “relating to soldiers, arms, or war or relating to armed forces.” This can include both ground and air forces as well as naval forces as well as the work “performed or made by armed forces.” Simply put, military forces and the related defense industries are those dedicated to fighting wars and working toward national defense, regardless of country.
The industry that supplies the world’s militaries, as well as its defense contractors and private security forces, is broadly included in the defense industry, which manufactures and sells weapons and military technology. This includes everything from firearms, to military aircraft, vehicles, software, tactical clothing and more, as well as the servicing of military material, equipment and facilities and other logistical and operational support.
Defense and aerospace companies are involved in the development, production and marketing of “guns, artillery, ammunition, missiles, military aircraft, military vehicles, ships, electronic systems, night-vision devices, holographic weapon sights, laser rangefinders, laser sights, hand grenades, landmines and more.”
Notable companies in the military and defense sector include Boeing, EADS/Airbus, United Technologies, Raytheon, Northrop Grumman and General Atomics Aeronautical Systems. Symantec, McAfee, Trend Micro and EMC are among the industry’s key security software and technology providers.
Why Invest in Military and Defense?
To put it mildly, defense is one of the world’s largest, most stable industries. As long as there is conflict, as long as there is war, there will be demand for new weapons systems and technology.
That’s one reason why Deloitte, in its 2019 Global Aerospace and Defense Industry Outlook said: “In 2018, the global aerospace and defense (A&D) industry recuperated and experienced a solid year as passenger travel demand strengthened and global military expenditure continued to rise. The industry is expected to continue its growth trajectory in 2019, led by growing commercial aircraft production and strong defense spending.”
Among the growth catalysts cited by Deloitte are intensifying geopolitical tensions all over the world, changes to international trade agreements that have the potential to disrupt the global supply chain as well as M&A activity that’s sweeping across the industry as suppliers look to cut costs while also increasing production. All of these factors are expected to drive new demand for military equipment and defense spending in markets all over the world.
And that’s to say nothing about the new technologies that are redefining the space. Deloitte cites intelligence, surveillance, target acquisition and reconnaissance (ISTAR) technologies, as well as cybersecurity and new types of unmanned aircraft as key growth levers for military spending going forward.
How to Invest in the Military
Of course, it’s impossible for investors to participate in the military activities that are controlled by national budgets. But profits can still be found in the companies that are the direct recipients of that military spending, including weapons manufacturers, technology providers and more.
A search on Magnifi suggests that there are a number of different ways for investors to get involved in Military & Defense.
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The information and data are as of the November 13, 2019 (publish date) unless otherwise noted and subject to change. This blog is sponsored by Magnifi.
Water
How Water Became an Investment Opportunity
In July 2010, the United Nations declared that access to safe and affordable water is a basic human right. Since that declaration, the world has made improvements towards broader access, but there is still a very long way to go.
According to a June 2019 study by UNICEF and the World Health Organization, roughly one-third of the global population does not have access to safe drinking water today. Access to safe drinking water means “drinking water from sources located on-premises, free from contamination and available when needed.” More troubling still, the study also found that roughly 785 million people worldwide lack basic water services entirely, and some 144 million are reliant on untreated surface water.
The World Economic Forum’s 2019 Global Risks Report, which annually identifies the most pressing global challenges, placed water crises among the top four risks, just behind extreme weather events, failing to prepare for climate change, and weapons of mass destruction. As the effects of climate change spread and become more pronounced, problems surrounding access to clean water are only expected to increase. According to the World Health Organization, roughly half of the world’s population will be living in water-stressed areas by 2025.
So, what are we to do with this troubling information? Throw up our hands and wait for someone else to sort it out? Innovators across the globe think not. They are looking to the future, and to technology, to develop the systems that will provide access to clean water across the globe. As they work to address one of the most pressing problems of our time, they will need capital, and lots of it. For those interested in investing in this rapidly-growing sector, however, there are a few important points to understand.
The Trouble with Water Access
At the heart of the global water crisis is the fact that water is too scarce in some places, too abundant in others, and the water that we do have access to is often expensive to treat. It is often not feasible to move large amounts of water great distances, and techniques for capturing and cleaning water in one place will not necessarily work in another. As such, innovators are coming up with local solutions to this global problem.
Water is often in short supply in the arid Atlas Mountains of Morocco, and climate change is driving the region into deeper and more persistent drought. After learning about fog harvesting used in other parts of the world, a Moroccan nonprofit teamed up with a German company, Aqualonis, to design and install a massive array of nets high in the mountains to harvest fog rolling in from the Atlantic Ocean. The project doubled the amount of water available to people in surrounding communities. Following the success of the Moroccan project, Aqualonis is planning several other fog catching projects across the globe.
Another striking innovation comes from Cody Friesen, founder of Zero Mass Water. He discovered a way to “pull” water from the air using solar panels, even in places where the air is quite dry. The panels have been installed in 33 countries across the globe, and they are providing clean drinking water to communities, refugee camps, and businesses. Zero Mass Water is now backed by a $1 billion fund led by Jeff Bezos and Bill Gates.
The Market Opportunity in Water
According to investment firm RobecoSAM, “Market opportunities related to the water sector are expected to reach USD 1 trillion by 2025. Companies that are early to respond and take steps to exploit the market opportunities associated with these water-related challenges are more likely to gain a competitive advantage and achieve commercial success.”
The global water crisis is not going away on its own, and climate change is only going to make the situation more dire in coming years. Investing in companies addressing the global water crisis makes financial sense because there is a growing demand for an increasingly finite resource.
The case can also be made that investing in water innovation is also a socially responsible investment. We are going to need many more innovations in the coming years to fully tackle the global water crisis, and investing now in companies already at the forefront of the fight will encourage further innovation.
How to Invest in the Future of Water
You cannot invest in water itself, of course, but you can invest in companies creating solutions to the global water crisis. For instance, the AllianzGI Global Water Fund specializes in “investing in companies offering solutions to help solve the global water challenge.” This fund returned an annual average of 9.83 percent over the past 10 years, compared with 5.37 percent for its average Morningstar peer. A search on Magnifi suggests that there are a number of other ways to profit from water innovation as a whole.
Unlock a World of Investing with a Magnifi Account
Magnifi is changing the way we shop for investments, with the world’s first semantic search engine for finance that helps users discover, compare and buy investment products such as ETFs, mutual funds and stocks. Open a Magnifi investment account today.
This blog is sponsored by Magnifi. The information and data are as of the November 6, 2019 (publish date) unless otherwise noted and subject to change.