Many long-term investment trends were accelerated by the Covid-19 pandemic, as the stringent lockdown measures sped up society’s transition into newer technology or cleaner energy sources. But some long-term themes were unexpectedly negatively impacted by Covid-19, according to AXA Investment Managers' Mark Hargraves.
Hargraves (pictured) manages the £165.7m AXA Framlington Global Thematics fund, which is currently focusing on five themes which he thinks will dominate global markets over the next decade. 
He explained that instead of viewing the world and global markets as a series of macro ideas, sectors and countries, the fund looks at the market “through the prism of the five themes” – which tend to fall into two overarching categories: technology and demographics.
Hargraves said the scope and application of technology has been “unprecedented”, with new innovations across consumer facing area, industrial and energy production.
Demographics is based around the demands and solutions of a global ageing population and how people consume differently as they age.
“The bit that people probably underappreciate is as we're getting older, there's less working age people,” Hargraves explained.
“And that has quite big ramifications for the global labour pool and the production side.”
Falling under technology and demographics are the five themes which Hargraves thinks are going to be major secular growth tends over the next 10 to 15 years.
AXA Framlington Global Thematics’ first theme is the connected consumer, which is about the shift to online retail as well as the software and products solutions on offer to manage that, such as cloud-based security.
“We’re all kind of experiencing this today,” Hargraves said, noting that the Covid-19 pandemic increased demands on tech more than ever to socialise, shop and work during the lockdowns.
Another theme is automation, with a focus on the shift to robotics.
“This is not so much traditional robotics, but it's about the movement to the intelligent factory, automated driving and areas such as ‘co-bots’, which are the little robots that can work next to you rather than the big ones we had in the past,” Hargraves explained.
The third theme is the clean energy and the transition into more environmentally friendly energy supplies.
“That is shifting to low carbon from high carbon fuel. But also, it's about changing consumer tastes, consuming natural foods, where it's sourced how we produce things, impact on the environment,” Hargraves said.
The penultimate theme is ageing and lifestyle, more specifically about longevity and the long-term healthcare implications of supporting an ageing population and the changes in consumption habits.
Transitioning societies is the fifth and final theme of the AXA Framlington Global Thematics fund.
“Transitioning societies is very much about the growth of new wealth and middle class development, particularly in Asia. So, it’s China and then probably the earliest stage of development India,” the manager said.
He added: “These to us are the kind of five big kind of themes that impact the global economy and for equity investors are very powerful themes.”
The neutral weighting of each theme in the portfolio is 20 per cent each, but Hargraves explained that it’s not as “clear cut”, since some stocks fall under more than one theme.
Like many managers, Hargraves said he’d seen some of AXA Framlington Global Thematics’ long-term themes accelerated by the Covid-19 pandemic.
“But it’s also introduced a couple of speed bumps in some areas,” he added.
The first theme that was more negatively impacted by the pandemic was automation.
As it is linked more towards the industrial economy, the manager said that “clearly the short macro slowdown associated with Covid has an impact on that”.
“We saw a dip, we would expect that, but actually we're seeing a pretty healthy recovery in investment activity.
Companies recognise the need to kind of move forward,” Hargraves said.
“And because the factory [feels the] impact from workers distancing that's kind of accelerated the trend to more intelligent factory working in a more automated fashion and the trends over the last two quarters have been pretty healthy on the automation side.”
The second theme that took a hit was ageing and lifestyle.
This is an area which wouldn’t usually experience a ‘speed bump’ during a normal economic cycle, according to Hargraves. But Covid-19 was different as this was a healthcare crisis which spun out into an economic one.
“The surprise was in our age and our lifestyles. And what we do here, we're focused on the consumption changes, but then we're focused on how the medical system adapts to the changing needs,” he said.
Hargraves explained that during the pandemic things like the telemedicine and remote care benefited, as doctor’s surgeries and GPs closed or had reduced service the solutions to give patients healthcare from home or virtually were more in demand than they had been.
But on another side, medical innovation involving things like robotic surgery was hurt by the pandemic.
“Now, you would not normally expect that in a normal economic downturn, because that's normally quite stable,” he said.
“But obviously Covid was very different because the hospitals were effectively rationing elective procedures because they were having to give up beds to Covid patients and the output of patients was a lot lower because of extra safety measures on operations as well.
So that part of the portfolio took an unexpected hit, actually.”
But the manager added that these are still strong businesses with the characteristics he looks for in potential holdings, such as good operating margins and strong balance sheets.
“And this is an important characteristic of the businesses we hold. If they have a speed bump, which can happen, they can manage it because they've got strong operating metrics,” he said.
“Their earnings were down for one or two, three quarters, but the fundamental long-term picture remains intact,” Hargraves said.
Hargraves runs the AXA Framlington Global Thematics fund along with Amanda O'Toole.
Over the past five years the fund has made a total return of 168.36 per cent, outperforming both the MSCI AC World index (121.29 per cent) and the IA Global sector (115.33 per cent).
Performance of fund vs sector and index over 5yrs
Source: FE Analytics
The fund has an ongoing charges figure (OCF) of 0.86 per cent and holds an FE fundinfo Crown rating of five.