Tech disruptions create winners and losers

Mawer's Jim Hall favours an industry-diverse approach to investing in innovators.

Diana Cawfield 26 May, 2016 | 5:00PM
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Amid widespread technological disruption, the challenge for portfolio managers is identifying the winners avoiding the losers, says Jim Hall, chief investment officer of Calgary-based Mawer Investment Management Ltd. "Trying to pick winners is very difficult," says Hall. "There is often only one winner in 100 but all 100 are priced to succeed."

Innovation is rapidly changing the world of telecommunications, the Internet and e-commerce, says Hall, who co-manages Mawer Global Equity and Mawer International Equity, both Gold-rated funds. As shown by companies like Uber Technologies Inc., an online transportation service, and Airbnb, a website for lodging, online innovators can shake up the competitive landscape. "Through the application of technology innovation, their growth is stealing business from other companies."

Despite advantageous positioning, the winning formula for an innovative enterprise can change. For example, Hall says, a company that was worth billions of dollars could be worth only $10 million two years later if somebody comes up with something even better. "It happens that fast."

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Securities Mentioned in Article

Security NamePriceChange (%)Morningstar Rating
Alphabet Inc A2,866.40 USD1.61Rating
Amazon.com Inc3,455.21 USD0.33Rating
Tencent Holdings Ltd60.28 USD2.72
Visa Inc Class A198.84 USD4.56Rating

About Author

Diana Cawfield

Diana Cawfield  Diana Cawfield is an award-winning writer who has been a regular Morningstar contributor since 2000. Her numerous publication credits include the Toronto StarAdvisor's Edge and Chatelaine, as well as the Canadian Securities Institute's online educational services.

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