INVESTING IN THE AGE OF DISRUPTIVE INNOVATION

Investing in global game-changing companies can make your money work for you and the planet.

“With CRISPR gene editing, we’re already conducting successful trials to correct paediatric blindness... and I believe that we’re going to see a cure for cancer.”

Not since the 1920s, when the way we experience the world was changed forever by technology we now take for granted, has so much radical innovation occurred at the same time. But whereas the car, television, telephones and consumer electronics were all invented in isolation of one another, today’s innovation platforms are evolving alongside each other at warp speed in a hyper-connected world. Breakthroughs in robotics, arti cial intelligence, energy storage, blockchain technology and DNA sequencing have put the world on the cusp of a genuine digital revolution. And unlike the Roaring Twenties, when the focus was on improving the lot of the individual, these disruptors are responding to global concerns to now save us from ourselves. One of life’s many paradoxes is that we tend to evaluate tomorrow’s opportunities based on yesterday’s metrics; the ‘we’ve always done it this way’ default. is even rings true in the investment market, where innovation-focused companies are judged alongside their more established peers on historic performance rather than potential. US investment rm ARK Invest focuses on companies that are changing the way the world works, with over US$1.8 billion invested through its Disruptive Innovation Fund; a fund available to New Zealand investors exclusively through Nikko Asset Management’s GoalsGetter platform. According to ARK founder Cathie Wood, the lack of understanding of the pace of advancements to date has resulted in a signi cant misvaluing of the companies involved in pioneering these new technologies. So for investors, this provides a unique opportunity to not only target attractive long-term returns, but to directly contribute to the wellbeing of their own and future generations. Wood says that her disruptive innovation investment strategy is follows Wright’s Law, which plots the divergent paths of technology costs and production volume. Citing both Wright’s Law and the critical advancements being made by Tesla in developing cobalt-less battery packs, Wood picks that within two years the price of an average electric car in the US will drop below that of its gas-powered equivalent, and by 2023 will be close to $10,000 cheaper. is is a tipping point in itself, but Wood nevertheless believes Tesla’s real game changer will be through the roll-out of autonomous EV taxis, which will dent global demand for oil by changing our car-owning and driving habits for good. Again, she believes this is closer to becoming reality than we may think. Wright’s Law can also be used to track advancements in DNA sequencing, where the cost has fallen from US$2.7 billion to sequence a single strand of DNA for medical research in the mid-2000s to US$1000 per person today and is still falling rapidly. e ability to identify and correct abnormalities in single strands of DNA within a mainstream price point will revolutionise the healthcare sector and have much wider implications. “With CRISPR gene editing, we are already conducting successful trials to correct paediatric blindness, and our analysts believe, and I believe, that we are going to see a cure for cancer,” says Wood. And from an investment perspective? ere are three companies that hold patents to use CRISPR technology to cure diseases such as cancer, coronary issues and blindness – and their cumulative value is US$5 billion, which Wood says leaves plenty of scope for growth. “Apple is a trillion-dollar company and it does great things, but it does not cure disease.”