Swiss asset manager Pictet drums up support for US$4.3b security fund from Asian investors
The Swiss asset manager is betting a growing market for security solutions as the explosive growth in internet of things constantly sparks new threats
Innovation in computing technology is fuelling a race towards automation which, some asset managers such as Pictet Asset Management, believe has also opened up opportunities for investors to profit from the growing market of security.
The so-called internet of things (IoT), defined by Gartner as a network of physical objects that contain embedded technology to communicate or interact with their internal states or external environment, has also brought about new security concerns.
By 2020, the number of connected devices is expected to triple to 30 billion from 10 billion in 2014, according to IBM.
Yves Kramer, senior investment manager of thematic equities funds team at Pictet, said he is hopeful of drawing more investors’ interest from Asia into its US$4.3 billion security fund.
“With the number of connected devices tripling, IoT constantly sparks new threats at a pace that isn’t slowing,” he said, adding that for Asia-Pacific, the five-year compound annual growth rate of the market for security products and solutions is estimated to reach about 10 per cent by 2021.
The dollar-denominated fund invests in stocks of companies that offer security solutions ranging from radar sensors and brake systems for autonomous vehicles; cybersecurity solutions; to physical security products such as helmets and protective lens.
Autonomous vehicles, which also falls under IoT, illustrates how both the private sector and governments are wary of new security threats.
Back in 2014, the US Federal Bureau of Investigation reportedly outlined its thinking in an internal report how autonomous driving could be a potential lethal weapon, for example, by allowing criminals to escape from law enforcers while their hands and eyes are free to counter those who give chase.
“With connected cars, [the development of] 5G mobile technology enables data transfer between vehicles so they can communicate to each other. [Autonomous vehicles] shows that as sensors … and devices retrieve information stored in the cloud, it creates demand for services related to data and network security, as well as disaster recovery,” said Kramer.
The fund currently is invested in companies that are primarily based in North America and Europe, spread across 72 stocks counting German automotive safety technology group Continental; cloud infrastructure and disaster recovery solutions provider Equinix; food safety and quality assurance provider Intertek, and others.
For the Chinese market, where food safety scandals and data security breaches by internet giants often make headlines, Kramer said the fund has no exposure to any Chinese equivalents.