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The information and data are as of the August 25, 2020 (publish date) unless otherwise noted and subject to change. This blog is sponsored by Magnifi.

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Ecommerce

Through the third quarter of 2020, consumers spent $580 billion online with U.S. retailers according to the U.S. Department of Commerce. Naturally, the fact that millions of Americans were sitting at home during the COVID-19 pandemic had a lot to do with this, but those big numbers were already trending higher. From Amazon, to Ebay, to Shopify, more people than ever are buying and selling online than ever before.

Most consumers know all too well that buying in an instant is easier than ever—from essentials like paper towels to novelties like birthday gifts to splurges like home décor and clothes. And, it seems one purchase always leads to the next, especially because of the carefully curated advertisements and reminders that are automatically triggered by online retail platforms to pop up on our screens.

Here is the short story of how the ecommerce we know on our screens today came to be in a relatively short period of time and why it’s both ever improving and here to stay.

What Is Ecommerce?

Electronic commerce, typically known as ecommerce, refers to the “buying and selling of goods, products, or services over the internet.” It extends beyond the transaction of money to funds and data. Think software subscriptions, streaming services, and data storage, to name a few.

Online shopping as we know it was later thought up by Michael Aldrich in the United Kingdom in 1979. Aldrich dreamed of buying his weekly groceries remotely (something that is all too familiar now) while on a walk with his wife. He accomplished this in a way by connecting a television to a transaction processing computer with a telephone line. He called it “teleshopping,” which referred to shopping at a distance.

Still, the first secure, official online retail transaction didn’t take place until in 1994 when a group of cyberspace entrepreneurs sold a Sting CD from one member to another. The transaction successfully utilized data encryption software to ensure data privacy, which was crucial to the adoption of online shopping.

That same year, in 1994, ecommerce giant, Amazon, launched. Since then, the “e-tailer” founded by Jeff Bezos has grown into the world’s largest online retailer; one that currently dominates B2C ecommerce. Originally selling only books, Bezos’s operation was doing $20,000 per week in sales within 30 days of launch.

Since then, the security, ease of use, and convenience, safety, and user experience of ecommerce have all improved exponentially. These improved factors have made ecommerce a viable and profitable new frontier for businesses large and small.

There are generally four types of ecommerce models. These include direct sellers, which operate similar to a physical store for customers but with transactions taking place online (Amazon and Wayfair); marketplaces, which offer platforms for buyers and sellers to connect (think Etsy); software providers, which sell subscriptions to cloud-based software; and logistics, which deliver goods (like UPS and FedEx). Within these four types, ecommerce generally happens one of six ways— Business-to-Business (B2B), Business-to-Consumer (B2C), Consumer-to-Consumer (C2C), Consumer-to-Business (C2B), Business-to-Administration (B2A) and Consumer-to-Administration (C2A).

Why Invest in Ecommerce?

Purchasing habits are changing with more Americans making purchases online than ever before. And, companies are listening by continuing to expand their technology budgets, which are up 4.2% in 2020 over 2019, in part with the shared goal to improve ecommerce sites and boost online sales.

More than ever, consumers are comfortable using their payment information in secure online platforms. According to a study by Price Waterhouse Coopers, more than half (51%) of respondents paid bills and invoices online in 2018, demonstrating an increasing comfort level with buying and completing transactions online.

Sellers aren’t shying away from the internet either, with numerous benefits for new ecommerce-based entities and traditional brick and mortar establishments alike. From the ability to be open for business and thereby make money 24/7 in an online platform, to providing an online space to accurately describe products in detail, to using SEO to attract consumers, selling online is giving retailers the opportunity to communicate better with customers, reach more people, sell more products, and be more successful.

In other words, the technology that facilitates the buying and selling of goods online, not to mention the companies selling more than ever online, offers extensive investment opportunities. Rest assured, online retail, and business generally, is poised to continue its pattern of growth and innovation.

How to Invest in Ecommerce

Naturally, in something as broad as ecommerce, investing isn’t as simple as choosing a few companies. In order to reach the full scope of this trend it’s important to invest broadly in all of the different sectors and niches that are shaping and being reshaped by this shift. Fortunately, a search on Magnifi suggests that there are a number of ETFs and mutual funds that cover ecommerce.

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The information and data are as of the July 28, 2020 (publish date) unless otherwise noted and subject to change. This blog is sponsored by Magnifi.

Infrastructure

As the economy rides out the new reality of the Coronavirus, spending on infrastructure could be an answer to the United States’ economic woes, according to a nearly $1 trillion government proposal currently in the works.

The U.S. infrastructure funding law is up for renewal on September 30th. In its absence, investors are expecting something big to happen. The news of the non-finalized proposal already sent stocks soaring. Last week, upon the announcement, Fluor Corp. surged 11% before regular U.S. trading began, while Vulcan Materials Co., another heavy infrastructure company, similarly climbed by 8.3%.

Regardless of the fate of this specific proposal, infrastructure as an agenda item isn’t going anywhere. According to a statement from White House spokesman Judd Deere, “Since he took office, President Trump has been serious about a bipartisan infrastructure package that rebuilds our crumbling roads and bridges, invests in future industries, and promotes permitting efficiency.”

In fact, infrastructure has been on the minds of lawmakers for some time now. In January, the Democratic-led house laid out a $760 billion, five-year infrastructure package. That follows another package set forth by President Trump two years prior that totaled $1.5 trillion. While neither of these proposals were the final fix, they underscore the need for improved infrastructure throughout the United States, and tangentially, a new era of government investment in the U.S.

It’s a sure bet that with the pending renewal date, the next generation of government-led investment is imminent in one form or another. Here’s what all investors need to know.

What Is Infrastructure?

Traditional infrastructure includes roads and bridges, yes. And in the U.S., ours need a lot of work. According to the American Society of Civil Engineers (ASCE), the U.S. needs to spend some $4.5 trillion by 2025 to fix the country’s roads, bridges, dams, and other infrastructure items that Americans rely on every day.

Per the same report, the 2017 Infrastructure Report Card (which is published by the ASCE every four years) many of the one million pipes that carry American drinking water have been in use for almost 100 years. Aging pipes are a serious issue when you consider that there are an estimated 240,000 water main breaks per year, not to mention issues with contamination.

And, more than 200,000 of the 614,387 bridges in the U.S. are more than 50 years old. It is estimated that these will cost as much as $123 billion to fix.

This physical infrastructure needs to be fixed.

But, amid today’s technological renaissance, our society is largely reliant on wireless technologies and networks more than ever, and that counts as infrastructure too. Accordingly, there is also a need to innovate and improve in the wireless and 5G network arenas, as well as implement better broadband access for rural areas of the country.

In other words, infrastructure today refers to both Route 66, as well as the “information superhighway.”

Why Invest in Infrastructure?

Roads and bridges are in many ways at the core of economic growth. According to the ASCE, “infrastructure brings you breakfast.” Its website follows a bagel from wheat fields in the Midwest to a bakery in the South, demonstrating how the price of the bagel is impacted by its journey along America’s infrastructure.

Traditional infrastructure provides essential services to society and benefits. They are “essential to the sustainability and growth of an economy,” according to the Royal Bank of Canada’s Global Asset Management.

Even more, because there is often little competition in regulated industries or after a government contract is established, traditional infrastructure investments tend to have sustainable cash flows and resistance to economic swings.

If the market for roads, bridges, and pipes seems pretty straightforward, consider what the new high-tech infrastructure of 5G could mean.

Given that the transition from 3G to 4G wireless communication helped usher in the era of online banking, Uber, and Snapchat, the nationwide transition from 4G to 5G could mean big changes and opportunities. 5G offers the most capable wireless infrastructure available that has the potential to be 100 times faster than 4G, with increased connection capacity.

Market intelligence firm IDC forecasts that worldwide 5G connections will reach 1.01 billion in 2023. That’s up from approximately 10.0 million from 2019. That’s good news considering that 5G is anticipated to be a driver of technological growth for years to come, supporting the “future digitization and automation of systems, connecting smart sensors with AI.”

In a world where the internet is more capable and reliable than ever before, does the wireless transmission of energy seem like a thing of science fiction?

It’s not. In fact, it’s already possible through UV rays, microwaves, electromagnetic fields, inductive coupling, and via Wi-Fi. And, even our electric toothbrushes. If applied on a large scale to the world outside of our bathrooms, the wireless transfer of energy could be transformative. It could give people without a reliable source of power, in rural areas for example, wireless access to a sustainable power supply.

The companies that make the component parts of this technology, like the makers of semiconductors that make chips for smartphones, are sure to soar with increased demand. Consider also the makers of wireless sensors, which support new gaming capabilities of 5G, and the manufacturers of fiber optic technologies that support new 5G networks.

It’s not just the makers of the hardware that will benefit. Mobile apps that require large amounts of data transfer, from Netflix to Spotify, are anticipated to see a boost from increased online capacity. Standard 5G systems are also expected to boost the speed and efficiency of cloud computing services.

The future of infrastructure is twofold — on both an improved roadway, and improved information highway. The need for investment is not a surprise to lawmakers or to the average American — but the reality of investment, especially considering the looming September 30 deadline, is imminent.

How to Invest in Infrastructure

Given the broad reach of infrastructure as an asset class, it can be challenging for investors to fully diversify their holdings. However, infrastructure-focused ETFs and mutual funds are a good way to access this sector without investing directly in individual companies. A search on Magnifi suggests there are a few different ways to do this.

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The information and data are as of the July 6, 2020 (publish date) unless otherwise noted and subject to change.This blog is sponsored by Magnifi.

Utilities

We turn on the water faucet every morning to brush our teeth and make our coffee. We click on the oven or the stovetop burner to cook our meals. We power up the heat when the air outside starts to chill or the AC on when the weather warms up. And then, like clockwork at the end of every month, we pay each of our utility bills.

Most of the time, utilities don’t come with many surprises. And, while costs always seem to go up, it’s usually a little bit at a time. But you likely already know this. Utilities are just part of life. Still, it’s possible that you’ve never considered the following: what would it look like if you invested in your utility services and they paid you like clockwork, as well?

Utility investments offer a unique way to diversify a portfolio— providing stability and returns almost as predictable as your monthly bill. Here’s why you should consider a utility-related investment product before your next billing cycle.

What qualifies as ‘utilities’?

Utilities include electricity, natural gas, and water and waste services.
American Water Works (NYSE:AWK), for example, is the largest publicly traded water and wastewater utility in the U.S. Through its subsidiaries, it services approximately 3.4 million active customers in 16 states. Over the last three years, it managed to grow its earnings per share by 9.1% per year, over three years. This past year, its revenue grew by 4.3% to US$3.6b.

The utility sector increasingly includes wind and solar. For example, NextEra Energy (NEE), which invests in renewable energy infrastructure, has performed well overall since its market debut.

At one-point telephone and cable companies were strictly regarded as utilities. In some cases, they still are (specifically landline services). But, improved technology and a changing, increasingly competitive market is transitioning them to part of the communications sector rather than a public utility.

Utilities, including electricity, natural gas, and water and waste services, typically have monopolies in the geographic regions that they serve. In part this is because the cost of building and maintaining a power plant, a grid network required for distribution of electricity, etc., and the customer service infrastructure to collect payments and meet the needs of mass users is expensive.

While the stability of no competition and a reliable customer base generally means that utilities are less impacted by economic downturns than other companies, it also means that they are regulated.

Regulation means that a government entity at the local, regional, and/or federal level participates in oversight. Typically, oversight would include the monitoring of utility rates for customers, regional growth rates, and service reliability. It limits the ability to easily make rate increases to adjust for a profit margin, for example, requiring that price increases be both necessary and approved.

Why invest in utilities?

Utilities are not a choice investment for making fast cash, rather they are a great way to diversify your portfolio. Considered a defensive investment, utilities can be a great tool to reduce overall risk. Utilities are generally regarded as a safe investment, more correlated with bonds than stocks, for a couple of reasons.

First, because utilities participate in a regulated industry, competition is generally stable and limited. They also rarely go out of business and because they have consistent customers who don’t have other options, they tend to have consistent revenue.

Second, because they are regulated entities, they have very predictable cash flow and profits. This allows utilities to pay consistent dividends, generating steady income for investors. They also pay relatively high dividends (typically 60 to 80 percent of their annual earnings) to shareholders in part because they have little need to reinvest earnings into operations. The need for energy resources to power our refrigerators, water from our sinks, etc. is all consistent regardless of the strength of the economy.

Investing in utilities that offer wind and solar opportunities can also provide a way for investors interested in environmental, social and governance to financially support companies aligned with sustainable values.

How to invest in utilities

Because of their infrastructure requirements, however, utilities tend to carry a lot of debt. This makes them vulnerable to rising interest rates. Higher interest rates both typically lower stock prices and increase debt for utility companies.

There are a number of ways to invest in utilities, but it’s most often wise to look for a mutual fund, exchange-traded fund, or company with diversified holdings. Diversification limits some degree of risk in the case of a natural disaster that damages infrastructure, for example.

However, utility-focused ETFs and mutual funds are a good way to access this sector without investing directly in individual utility providers. A search on Magnifi suggests there are a few different ways to do this.

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with a Magnifi Investment Account

The information and data are as of the June 30, 2020 (publish date) unless otherwise noted and subject to change. This blog is sponsored by Magnifi.

Automation

If automation makes you think about robots, you aren’t alone. But, while smart robotics is a major part of the industry, that’s not all there is to automation anymore.

For example, how was your company’s most recent email campaign sent? It is unlikely that each email was sent one by one. Instead, the send was probably automated using an email service that leveraged a database of information to deliver specifically crafted emails to a designated target audience.

What about your most recent hire? Did you review resumes by searching for keywords on paper from file folders, marking each with a highlighter? The likelihood is that your company used an automated hiring and recruitment tool that allowed them to search keywords in a convenient toolbar.

When you scheduled your last meeting with a handful of coworkers, did you review each of their calendars individually and log their availability in a notebook? Or, did you send a Doodle?

This even extends to operations. Is your customer service team still the front line for all of your customers’ questions. Likely, no. It’s highly probable that your customer service team utilizes a chatbot that has some intelligence capabilities. This function allows them to be more agile, responding promptly and completely to customers with concerns that need to be directly addressed at all hours of the day and night.

These functions weren’t performed by humans or robots. Instead, they were executed by a business application of automation technology.

What Is Automation?

The traditional definition of automation is “the technique of making an apparatus, a process, or a system operate automatically.” According to the International Society of Automation, however, automation is “the creation and application of technology to monitor and control the production and delivery of products and services.”

In short, it’s using mechanized systems to perform tasks that would otherwise be done by people. By cutting out the human operator, automation can help cut down on errors, add new efficiencies to processes, increase productivity, reduce labor, improve safety and lead to higher profits.

Today, automation is becoming increasingly intelligent and effective. This is helping it turn up in businesses in ways that are less than obvious.

Like in the example above, a chatbot answering a customer question rather than a person is one business application of automation technology. But it can be much more than that. Automation is also the intelligence that results in linking the right information to the right person or product. This is particularly important in manufacturing.

Emerson, an electrical multinational company based in Missouri, for example, offers a product called the PlantWeb digital ecosystem. The system improves performance by collecting and synthesizing data from equipment and processes, and then delivering it to the most appropriate human for intervention.

Similarly, consider Zebra Technologies Corp, which offers software and tracking services. It’s technology has applications that improve services across industries including retail, warehouse and distribution, healthcare, manufacturing, transportation and logistics, hospitality, energy and utilities, and the public sector. Recently, it introduced SmartSight, an intelligent automation solution that can spot errors on retail and warehouse shelves and prescribe solutions.

In the retail space, Amazon’s analysis of prior customer purchases and its suggestions of additional products that each customer might consider as they complete their online order. Certainly, a person isn’t behind the scenes drafting a “might like” list. Instead, it’s all automated, and it’s usually fairly accurate.

But that’s just the beginning. Automation technology is also enabling augmented intelligence, where artificial intelligence and machine learning are combined to deliver new cognitive systems that go beyond what humans could accomplish working on their own. According to PwC, these systems can be used to “augment human-driven processes such as data manipulation, exception management and continuous straight-through processing improvement unlocking the value across all areas of the business.”

By layering together automation with these intelligent technologies, organizations are able to transform how they work, how they deliver services, and how they scale their businesses.

Why Invest in Automation?

Automation is making things work better all around us. It reduces costs, increases productivity, increases reliability, reduces bottlenecks, and increases overall performance. Most importantly, automation is becoming increasingly accessible to small businesses thanks to the flexibility and lower cost of cloud-based platforms and services.

As of 2018, the automation market was estimated to be worth as much as $160 billion, on track to grow nearly 12% per year through at least 2025. Much of this growth is happening in Asia, the world’s manufacturing center, which owned 32% of the total automation market as of 2018. According to the International Monetary Fund, there are roughly 1 million robots currently at work in Asia, accounting for 67% of global industrial robot usage.

Much of the growth in the automation market is expected to happen in 3D printing, where automated printers are already being used to produce machine parts, and nanomanufacturing, where automation is helping produce solar cells, batteries and other tiny manufactured parts.

Manufacturers of all sizes, for example, are increasingly using automation to evaluate the efficiency of their processes. Automation gathers data from designated equipment, compares the gathered information to a set of ideals, and then suggests actions to be taken to achieve desired results.

In HR settings, even the simple ability to autofill data rather than manually enter it both improves efficiency and reduces the opportunity for human error. When harnessed, it should be a “driver of growth and job creation, including in new occupations and industries never before imagined,” according to the Aspen Institute.

How to Invest in Automation

Investing in automation technology doesn’t have to mean picking the next big company with the most advanced robotics. Automation-related ETFs exist and include the Robo Global Robotics & Automation ETF, which has over $2 billion in assets. These allow investors to have diverse holdings in automation advances.

After all, given the rapid growth of the automation sector, investing in one particular company can be risky. Finding ETFs and mutual funds that offer exposure to this fast-growing sector as a whole is a better gain to gain exposure to the technology as a whole as it continues to develop and evolve. A search on Magnifi suggests there are a number of different ways for investors to do this.

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The information and data are as of the June 29, 2020 (publish date) unless otherwise noted and subject to change. This blog is sponsored by Magnifi.

Medical Devices

[What else is happening in healthcare? Here’s Magnifi’s take.]

When we think “medical device,” we might automatically think of the beeping equipment in a hospital room. But, in today’s world, medical devices are much more— perhaps even closer to science fiction than traditional science.

The medical device market is anticipated to reach $432.6 billion by 2025, according to a recent report published by Lucintel.

In part, this growth is driven by the increasing sophistication of technology. Medical devices are becoming smaller and smarter than ever, performing increasingly complex and constantly improving functions.

Moreover, escalating healthcare costs, a rise in chronic diseases, and a growing aging population are compelling health care providers to seek out new, more efficient care models. From 3D printing human tissues to monitoring patients according to their specific clinical needs after they leave the hospital, innovative medical devices are meeting that need.

New medical devices are offering a myriad of useful answers to complex health challenges, changing the reality of care in new and exciting ways.

What Are Medical Devices?

According to the World Health Organization, ‘medical device’ means any instrument, apparatus, implement, machine, appliance, implant, reagent for in vitro use, software, material or other similar or related article, intended by the manufacturer to be used, alone or in combination, for human beings, for one or more of the specific medical purpose(s) of:

diagnosis, prevention, monitoring, treatment or alleviation of disease,
diagnosis, monitoring, treatment, alleviation of or compensation for an injury,
investigation, replacement, modification, or support of the anatomy or of a physiological process,
supporting or sustaining life,
control of conception,
disinfection of medical devices
providing information by means of in vitro examination of specimens derived from the human body;

and does not achieve its primary intended action by pharmacological, immunological or metabolic means, in or on the human body, but which may be assisted in its intended function by such means.

So, health monitors, check. Brain sensors, check. 3D printed prosthetics (and ears!), check again.

Why Invest in Medical Devices?

The landscape of medical devices is growing rapidly, with technology making the impossible possible.

Wearables

The rise in wearables isn’t limited to FitBits. And when it comes to medical devices, wearables do much more than measure your steps. For one, wearables can offer real-time patient data to health care providers. And, when they connect with Artificial Intelligence-based programs, they not only collect information, but also analyze it against big data.

Up-to-minute information about vitals limits the need for in-person appointments and can lead to better patient outcomes. For example, Current Health’s Remote Patient Monitoring Platform is AI powered and customizable according to a patient’s risk level.

Some emerging wearables can also perform health interventions. In early 2019, the U.S. Food and Drug Administration (FDA),approved the first wearable, portable peritoneal dialysis. Developed by Singapore-based AWAK Technologies, the device has the potential to change the lives of dialysis patients around the world.

Perhaps even more exciting, researchers at the University of Michigan have developed a wrist-worn prototype that screens the wearer’s blood over the course of a few hours, analyzing it for circulating tumor cells (CTCs).

Wearables can be used for everything from pre-surgical planning to gene sequencing and medical imaging, making their health and investment opportunities plentiful.

Brain Sensors

These days, brain sensors come in many shapes and sizes. Some are placed in the brain itself, measuring temperature and pressure before dissolving. This information can be crucial for patients with traumatic brain injuries, for example. Their dissolvable nature not only negates the need for surgery to remove them, but also limits the risk of infection and complications associated with long-term implants.

Alternatively, the company Advanced Brain Monitoring offers products designed to track function as it relates to chronic diseases and early stage neurodegeneration.

Still others are more consumer oriented, like the company Muse, which sells headsets that act as a brain fitness tool, measuring and tracking brain activity.

Artificial Organs

Certainly many things — like the heart — can’t be replicated. Right? Actually, that’s not entirely true anymore.

iSynCardia Systems recently received FDA approval for its most recent iteration of a total artificial heart, the 50cc temporary Total Artificial Heart System (50cc TAH-t).The company’s artificial heart, first approved in 2004, is meant to be a bridge until a biological donor becomes available. Artificial organs, whether printed or made otherwise, offer a lot of promise, providing millions waiting on donor organs an alternative.

3D Printing

According to the FDA, “3D printing is a process that creates a three-dimensional object by building successive layers of raw material.”

Not only does 3D printing allow for the creation of more patient-specific devices, it allows for more specific variation in medical tools. Rather than buying large quantities of a tool, providers can print them on demand. Similarly, customized prosthetics and orthopedic implants are more possible than ever, improving the likelihood of patient success.

Bioprinting

Now, for the real science fiction stuff.

Bioprinting uses carefully designed bio inks made of biomaterials and cells to 3D print living obstacles, such as tissue or organ. Pioneered a decade ago, bioprinting in its early days was developed to improve wound reconstruction related to burns, one of the most common types of traumas worldwide. Since then, scientists have gone as far as to develop a prototype of a handheld bioprinter designed specifically to help skin regenerate in areas affected by large wounds.

Beyond skin, scientists have succeeded in bioprinting an artificial pancreas, a synthetic ear, a meniscus made in space, and even bone tissue. Researchers are even working on bio-printed ovaries for women suffering from infertility.

How to Invest in Medical Devices

As an emerging industry, particularly one in the feast or famine sector of biotech, investing in medical devices directly can be risky. Although medical devices on the whole have been around for decades, the innovative new solutions at the forefront of the industry remain largely untested. This can make investing in individual medical device companies a risky proposition.

However, a search on Magnifi indicates that there are a number of ETFs and mutual funds available to give investors broad exposure to this industry without concentrating their bets on any one company.

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The information and data are as of the June 11, 2020 (publish date) unless otherwise noted and subject to change. This blog is sponsored by Magnifi.

Healthcare

Make no mistake, the COVID-19 pandemic has been a wake-up call for millions of people around the world. Suddenly, maintaining our health is the most important thing on our minds, overtaking all of the usual daily tasks like work, school and entertainment.

Economies have shut down, governments have scrambled to adapt and we’re still not yet sure what the world will look like on the other side of this.

But one area that’s seeing direct impacts is the healthcare industry. Not only are millions turning to their healthcare providers for help addressing COVID-19, but they’re also doing so in new ways as a result of the pandemic. Stay-at-home orders and concerns over exposure at hospitals have led to an explosion in the use of telehealth and digital health services.

This isn’t all new, of course. It’s been a long time since the stereotype of the lone country doctor doing house calls has been even close to true, and the industry has been evolving and growing ever since its earliest stages prior to the Civil War. In those days, medical care was a luxury with hospitals located in a few major cities to serve patients but little else available. The first hospital in the U.S., the Royal Hospital in New Orleans, opened in 1722 as a military facility but was later switched over for civilian use. By that point it was too expensive for the majority of the residents in the area to visit, so a second, charity-based hospital was built nearby, starting the tradition of hospitals serving all as a type of public service.

Medical innovation accelerated dramatically in the 20^th century, with the advent of new technologies like X-ray and Magnetic Resonance Imaging improving doctor’s diagnostic capabilities, the expansion of vaccines helping to protect public health from infectious diseases, to new surgical anesthetics, antibiotics, heart surgeries, radiologic imaging and more.

As ABC News explained in 2007: “Whether it’s the technology that allows us to peer deep into the body or medicines that extend the lives of those with chronic diseases, it’s easy to see how advances in health and medicine have touched the lives of nearly every person on the planet. Yet considering the ubiquitous nature of these developments, it is easy to see how many people take for granted the technologies and practices that, at one point or another, almost certainly saved their own lives or the lives of people they’ve loved.”

The history of healthcare is a history of innovation.

That’s one of the reasons that it has become such a popular segment for investors looking to generate gains while also supporting work that’s protecting the health of millions of people. But, for those interested in the investment potential of this booming market, there are a few important points to understand.

What Is Included in ‘Healthcare’?

According to Webster’s dictionary, “healthcare” includes any “efforts made to maintain or restore physical, mental, or emotional well-being especially by trained and licensed professionals.” This includes everything related to maintaining or improving a person’s health, including the prevention, diagnosis, treatment, recovery or cure of diseases, injuries and any other physical problems that they might be experiencing.

And the list of other professionals involved in delivering healthcare is equally long, including doctors, nurses, surgeons, pharmacists, dentists, optometrists, psychologists, therapists, athletic trainers and more. Anyone providing care to people – including on the scale of public health – is involved in healthcare.

Here in the U.S., the term “healthcare” also typically applies to the entire healthcare delivery system, ranging from individual doctor’s offices all the way up to hospitals and pharmaceutical companies. A health system is a network of related facilities – usually three to 10 hospitals – that work together to deliver health services to patients in their geographic area. The National Bureau of Economic Research defines health systems based on three types of arrangements: (1) organizations with common ownership, (2) those that are contractually integrated, and (3) those that are part of informal care systems, such as common referral arrangements. “Systems include organizations combined horizontally (e.g., a hospital system) or vertically (e.g., a multihospital system also owning physician practices and post-acute care facilities).”

These systems are typically major employers in their communities and are effectively one-stop-shops for all of their patient’s healthcare needs.

Of course, delivery is just part of the healthcare equation. It also has to be paid for, and that’s where the health insurance side of things comes into the picture. Health insurance today is a tangled web of private plans, employer-provided plans, government-backed programs like Medicare and Medicaid and more. Add to this the Affordable Care Act, introduced in 2010, intended to overcome some of the limitations of the private, for-profit health insurance industry and expand affordable coverage to all Americans.

Why Invest in Healthcare?

As an industry, healthcare is massive.

Worldwide, the industry was worth $8.45 trillion as of 2018 and accounts for about 10% of most GDPs. This is on track to exceed $10 trillion by 2022.

In the U.S., it’s even bigger. As of 2019, healthcare accounted for nearly 18% of U.S. GDP and is the country’s largest employment sector, employing 1 out of every 8 Americans. We also spend the most on our health individually, at more than $10,000 annually per capita.

It’s also an extremely lucrative segment of the economy. Among the 784,000-plus companies in U.S. healthcare, more than $1 trillion in annual revenue comes from patient services, with $74 billion coming from rehab services, $50 billion from dental services and more than $44 billion from government grants and contributions. Healthcare deals with a lot of big numbers.

But there are hopes that new technologies can help tame this system and unlock new efficiencies. According to some estimates, the internet of things (IoT) can lower the costs of operational and clinical inefficiencies by $100 billion per year, and 64% of physicians believe it can help reduce the burden on nurses and doctors.

Beyond IoT, healthcare is finding new applications for Artificial Intelligence in managing patient care, blockchain in handling patient health records, chatbots for customer service and virtual reality for physician training. That’s to say nothing of the potential for marketing automation, supply chain logistics and other proven technologies that are finally finding applications in the healthcare space.

How to Invest in Healthcare

Naturally, healthcare is a large and sprawling industry. For investors, it can be challenging to choose where to invest in a segment that includes everything from drug development, to medical devices, to home health services and much more.

Investing in a mutual fund or ETF that offers exposure to the entire healthcare world is a good way to overcome this limitation, and a search on Magnifi suggests that there are a number of such funds for investors to choose from.

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The information and data are as of the June 3, 2020 (publish date) unless otherwise noted and subject to change. This blog is sponsored by Magnifi.

Sports

[Is streaming the future of sports?]

While watching your favorite team from your couch or in the stands (probably sporting your favorite team hat or player jersey) you may have let yourself daydream a time or two…what would it be like to own a team?

But, for most sports fans, that’s only a dream. The Los Angeles Clippers in 2014 were sold for $2 billion. Most professional sporting organizations have similar sky-high values.

This huge cost doesn’t mean, however, that less wealthy investors are precluded from investments in the big sports. The elite nature of teams is, in fact, not a barrier to entry at all. Rather, the loyal fan base these teams attract makes for a broad market of investment portfolio possibilities.

More than 16.5 million viewers tune into the average NFL game, according to Sports Illustrated. In 2019, 102 million people tuned in to watch the Super Bowl.

And, sports are way more than American football. According to FIFA, 3.572 billion people watched the 2018 FIFA World Cup. That’s more than half of the global population aged four and over.

In other words, there is major opportunity to be had in investing and capitalizing on society’s fascination with sports.

In 2019, the sports industry in the United States topped $73 billion. It is anticipated to reach $83 billion by 2023. In part, this is because of the growing number of industry players.

The sports market has four primary segments: gate receipts (ticket sales for live sporting events), sponsorship, media rights and merchandising. That’s just scratching the surface.

Outside of the stadiums, technology in sports is helping fans to follow their favorite teams more closely than ever before. Technology is also changing the sports ecosystem in both some expected and some unexpected ways.

Can You Invest in Sports?

When it comes to investing in sports, opportunity abounds, especially for those who think beyond the playing field.

Think back to your favorite hat or jersey, and then to the millions of sports lovers wearing something similar that represents the team that they follow.

For investors, that means money can be well served in merchandising via publicly traded sports apparel manufacturers such as Nike, Under Armour, and Lululemon Athletica, top retailers like Dick’s Sporting Goods, or even equipment manufacturers such as Brunswick Corporation. This type of investing is ideal for those with an interest in investing in physical products.

Other less tangible opportunities include investing in the broadcasting of sports. ESPN, the world’s largest sports broadcaster, is owned by Walt Disney (NYSE:DIS). The station is a money-maker for Disney, offering live coverage of some of the most-watched sporting events.

By 1990, The Wall Street Journal ranked ESPN the # 1 channel on cable with 54.8 million subscribers, ahead of CNN & MTV at the time. The channel launched the streaming service ESPN+ in 2018, to provide expanded access to select live MLB, NHL, NBA, and MLS games, in addition to other sports offerings from boxing to cricket.

If ESPN isn’t interesting, there’s also the option of investing in publicly traded companies that own interests in professional sports teams. For example, MSG Networks (NYSE: MSGN), owns the New York Knicks and Madison Square Garden.

Investors can also consider venues. The MGM Grand Casino in Las Vegas, NV (NYSE: MGM) is a tourist hotspot. With its MGM Garden Arena in Las Vegas, it is one of the premier sports venues hosting major events like All Elite Wrestling’s inaugural event, Double or Nothing. According to All Elite Wrestling, the event sold out in four minutes. The Garden Arena also hosts professional boxing matches, UFC mixed martial arts events, amongst many others.

Why Invest in Sports?

The sports industry is growing and changing. According to Deloitte’s 2020 Sports Industry Outlook, the five trends likely to have the greatest impact on the industry are: (1) The rise of women’s sports, (2) The continued evolution of esports, (3) Legalized sports betting, (4) College athletes maximizing their short-term value, and (5) 5G and sports in the cloud.

And, perhaps to everyone’s surprise, sports are no longer strictly physical in nature.

Technology is not only helping fans to connect with their teams, individual athletes, and other forms of sports entertainment more than ever before, it’s allowing sports enthusiasts to attract their own audiences through eSports.

eSports are described as the world of “competitive, organized video gaming.” According to research firm Newzoo, the number of esports viewers worldwide will grow from 380 million to 589 million by 2020. It’s predicted that eSports viewership will eventually surpass even that of mainstream sports.

And, big companies are taking notice.

Amazon acquired Twitch streaming service in 2014. Now valued at $3.79 billion, Twitch has an average of 15 million viewers each day who tune in to watch or host live streams.

Sports technology goes beyond even the rise of esports to training and filming. Consider wearables, virtual reality used by athletes to train, and the advancing drone technology that captures live games like never before. These applications of tech are all opening up the market for more investment than ever before.

An investment in sports, with their eager and loyal fanbases and emerging technology applications, includes a world of opportunity beyond the action on the playing field.

How to Invest in Sports

But sports and its related industries are spread out and difficult for investors to access directly. Investing in the sector via an ETF or mutual fund, however, is a good way to bring these different industries together to gain exposure to this high-potential segment. A search on Magnifi indicates there are a number of ways for investors to access sports this way.

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The information and data are as of the May 28, 2020 (publish date) unless otherwise noted and subject to change. This blog is sponsored by Magnifi.

Travel

It will come as no surprise that the global travel sector has been hit extremely hard by the ongoing COVID-19 pandemic. Planes everywhere are grounded, beaches and restaurants sit empty, and people everywhere wonder when things may return to normal.

According to the World Travel & Tourism Council, the global travel and tourism sector accounts for 10.3% of global gross domestic product and supports 330 million jobs worldwide. From car rental companies to hotels, there is no corner of the travel sector that has been untouched by the pandemic.

Even though countries around the world are beginning to ease lockdowns and discuss how to reopen responsibly, COVID-19’s impact on the global travel sector has been staggering. The U.S. Travel Association expects a $519 billion decline in travel spending in the U.S. in 2020, with travel-related job losses reaching eight million by the end of April alone.

These projections, though undeniably bleak, do not capture the long-term trajectory of the travel sector.

In the short-term, travel-related businesses are going to suffer mightily. In the long-term, however, the pandemic will end and people will start traveling again. The pandemic will not erase the essential need for travel, but it will change how we travel. Industry experts anticipate that technology will play an increasingly important role in helping to limit physical contact between people and surfaces.

Airports, for instance, are likely going to increasingly implement new technologies that provide for a less crowded and more touchless travel experience. Airports were already moving in this direction, but the painful lessons of COVID-19 will accelerate the transition.

Amid all the doom and gloom, it is important to note that massive disruptions, though terribly painful, ultimately ignite innovation and drive creative problem solving.

Airbnb was founded in 2008, in the depths of the Great Recession, and became a wildly popular solution to the problem of soaring rent prices. By 2018, Airbnb owned about 20% of the entire U.S. consumer lodging market.

The global travel sector is down, but not out. New companies will emerge from this crisis and disrupt the sector in ways we cannot anticipate, and established companies will need to innovate, streamline, and modernize in order to draw customers back. In this space, there may be opportunities for intrepid investors.

For those interested in the investment potential of this crucial sector, there are a few key points to understand.

What Makes up the Travel Industry?

The travel sector is vast and contains many industries, including transportation, lodging, food and beverage, entertainment, and more. Travel may be domestic (within one’s home country) or international (outside of one’s home country), and may be for pleasure (tourism) or business.

The economic significance of the travel sector is enormous. For example, international and domestic travelers in the U.S. directly spent about $1.1 trillion in 2019. This spending supported 15.8 million jobs and generated $179.7 billion in tax revenue.

In comparison, in 2019, U.S. consumers spent about $400 billion on consumer technology and about $460 billion on new vehicles.

As a percentage of gross domestic product (GDP), the travel sector’s weight varies significantly from country to country. For example, 2.9% of the U.S.’s GDP is attributed to travel, while 15% of Spain’s GDP and 13% of Italy’s GDP are attributed to travel.

The immediate economic impacts of the pandemic lockdown will be most acutely felt in countries where travel spending represents a large portion of overall GDP, and governments around the world are scrambling to develop recovery plans to prevent layoffs and bankruptcies. In mid-April, U.S. airlines agreed to a deal with the federal government for about $25 billion in assistance in exchange for airlines continuing to pay employees through September 30th. 70% of this federal assistance comes in the form of a one-time cash grant that does not need to be repaid, while the remaining 30% comes in the form of low-interest loans that must be repaid over 10 years.

The Treasury secretary, Steven Mnuchin, said in a statement that the agreement would “help preserve the strategic importance of the airline industry while allowing for appropriate compensation to the taxpayers.”

Why Invest in Travel?

The travel sector is in survival mode at the moment. The name of the game at this point is to maximize efficiency and raise enough money to cover costs while the pandemic runs its course.

Government assistance will help in the short-term, but in the long-term people will need to start traveling again in order for businesses to stay afloat. Looking at the situation pessimistically, it is possible that a prolonged shutdown will lead to a recession, and people travel less during recessions.

On the other hand, if the pandemic is brought under control in the near future, it is also possible that demand for travel will increase sharply. Another possibility is one in which demand for domestic travel increases while demand for international travel stays low.

There is some evidence that this last possibility may be the most likely. After easing lockdowns and reopening the economy, domestic air travel in China has doubled over the past two months.

After weeks (and in some places, months) of lockdown, people everywhere are eager to leave their homes. One recent survey of 2,000 travelers found that for 82% of respondents, travel was only temporarily paused, and 42% would be ready to make travel reservations if there were no deposits required or cancellation fees.

There is still enthusiasm and demand for travel, but the timing of when and how travelers can make their plans a reality remains to be seen. For investors interested in capitalizing on a resurgent travel market, it will be crucial to stay informed and keep a close eye on public sentiment, easing or tightening of government travel restrictions, and the market’s ability to meet demand when it returns.

How to Invest in Travel

Naturally, investing in an industry in crisis can be risky, but travel-related ETFs and mutual funds allow investors to access the space without tying them to any one company. A search on Magnifi suggests there are a number of ways to gain access to the travel segment via these funds.

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The information and data are as of the April 30, 2020 (publish date) unless otherwise noted and subject to change. This blog is sponsored by Magnifi.

Forestry

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One of the more interesting quotes often attributed to famed investor Warren Buffett concerns planning for the future: “Someone’s sitting in the shade today because someone planted a tree a long time ago.”

Forests take decades to grow and mature and only moments to destroy. Properly managing a forest involves meeting the economic necessities of the present while laying the groundwork for ecological health and economic potential into the future. Forests provide countless, critical ecosystem services, including storing and purifying water, stabilizing soil and preventing erosion, capturing carbon dioxide from the atmosphere, and fostering biodiversity.

Forests also provide significant economic benefits, including timber for construction, wood pulp for paper, and firewood for heating and cooking.

Historically, the ecosystem services and economic benefits of forests have often been in conflict with each other, with people often placing short-term economic benefits above long-term ecosystem health, ultimately at the cost of both.

For a recent example of this conflict, look no further than the 2019 Amazon rainforest wildfires. In an attempt to clear land for cattle grazing, ranch owners across the shrinking Amazon rainforest lit fires that quickly spread out of control, burning an estimated 2.3 million acres of forest and darkening the midday sky of cities hundreds of miles away.

Forests must be carefully managed in order to provide mankind with crucial economic benefits while also performing essential ecological functions. Millions of acres of burned rainforest may provide ranchers with a temporary economic boom in terms of a larger grazing area, but the long-term effects of haphazardly clearing forests result in dire ecological and economic costs.

Professionals in the forestry industry work to achieve a sustainable balance between the environmental and economic demands placed on forests. Though the management of forests is a very old profession indeed, the forestry industry is currently in the midst of a rapid modernization as business and environmental interests implement technological innovations that increase profitability and improve ecological health.

This modernization is especially significant because of the role forests play in fighting climate change. Forestry professionals are looking to innovation to help them do more with less, and the growing urgency to address climate change will likely mean that innovation will be highly valued.

For those interested in the investment potential of this important industry, there are a few key points to understand.

What is forestry?

The North Carolina Forestry Association defines forestry as “The art and science of managing forests to produce various products and benefits including timber, wildlife habitat, clean water, biodiversity and recreation.”

As an industry, forestry is vast, encompassing a multitude of business operations concerned with harvesting, transporting, refining, and distributing forest products. Deeper still is the underlying machinery and technology that make modern forestry possible. 100+ years ago, harvesting timber often involved men felling trees with axes or saws and transporting the timber to a sawmill via mule train. These days, timber is often harvested using cutting-edge technology, such as the cut-to-length (CTL) harvesting method. With CTL harvesting, specialized equipment cuts, cleans, and loads logs for transport in a matter of seconds, all while operators are safely inside the machine cabs and away from falling branches and dangerous terrain.

There is a growing movement in the forestry industry towards what is referred to as “precision forestry.” Precision forestry is an approach to managing forests that utilizes advanced technology to unlock greater economic and environmental value through improved information gathering and operational control.

For instance, lidar is a cutting-edge surveying technology that uses lasers to generate extremely detailed maps. After mapping a forested area using lidar, forestry professionals are able to accurately estimate the quantity of standing timber, as well as where the access road should be built and which machinery should be brought in to do the job. Better information through technologies like lidar means that forest managers are able to make decisions that improve cost-efficiency and minimize environmental damage.

When combined with other cutting-edge technologies, such as drones, soil sensors, and IoT-integrated devices throughout the harvesting and reforesting process, precision forestry is set to unlock significant value across the forestry industry.

Why invest in forestry?

While the accelerated adoption of advanced technologies is likely to improve cost-efficiency and drive innovation across the forestry industry in the coming years, current trends indicate that the industry faces tough headwinds. The demand for construction lumber, which surged in the years following the Great Recession, is waning, and domestic producers are facing increased competition from foreign lumber firms.

In the U.S., industry performance is highly correlated with the strength of the housing market: a robust housing market usually means more new homes and an increased demand for wood products.

For instance, Weyerhaeuser (the largest forest product company in the U.S.) experienced a sharp stock price drop as a result of the Great Recession and the collapsing housing market, from a high of $86 per share in early 2007 to a low of $15 per share in mid-2010.

U.S. revenues from forest products in 2019 totaled about $128 billion, and revenues from exports of forest products in 2019 totaled about $16 billion. Paper mills, which currently comprise the single largest segment of the U.S. forestry market, are forecast to see revenue decrease by -2.6% annually over the next five years. Sawmills and wood production, the second-largest segment, are forecast to see revenue increase by 1.1% annually over the next five years.

The segment with the fastest projected growth is prefabricated home manufacturing (think mobile or modular homes), which is forecast to see revenue increase by only 2.2% annually over the next five years – a sharp decline from the 8.6% annual growth the segment saw during the previous five years.

Successfully investing in forestry involves understanding the underlying market forces driving industry performance and trends, while assessing the value of a mid or long-term stake in the industry relative to other, higher-performing industries.

How to invest in forestry

However, forestry is a legacy industry that is dominated by a few major players. That means investors have few choices when investing directly, and that fact puts them at risk in the case of an industry-wide downturn. Investing in forestry via related ETFs and mutual funds, though, allows investors to access the space without tying them to any one company. A search on Magnifi suggests there are a number of ways to gain access to this segment via these funds.

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The information and data are as of the April 12, 2020 (publish date) unless otherwise noted and subject to change. This blog is sponsored by Magnifi.