Innovation as Third Style and Core Allocation

schwartzfinal
Global Head of Research
Follow Jeremy Schwartz
09/10/2021

On Behind the Markets, a podcast brought to you by Jeremy Schwartz, WisdomTree’s Global Head of Research, we talk to market strategists, business executives and financial advisors about important trends in the financial markets. 

In this episode, Jeremy talks to Tom Ricketts, President & CIO of Evolutionary Tree Capital Management. 

In this episode, listeners will hear about:

  1. The rise of innovation investing as a new investment style—the “third style”
    • How innovation relates to traditional investment styles of growth and value
    • The difference between growth investing, which looks at companies that have grown their earnings or sales over the previous three to five years, and companies operating at the frontiers of the innovation S-curve—how that portends future profits and added value

  2. Managing risk when investing in innovative businesses

  3. How to avoid hype around innovation that is too early

  4. Examples of important innovations and innovators
    • Subscription-based businesses and the growing dominance of software-as-a-service (SAAS) businesses
    • New marketing models
    • Biotechology stocks and new platforms that suggest the genomics and biology revolution is at the most exciting phase in Ricketts’s 20 years of looking at the space

  5. Why Ricketts believes an innovation allocation should become a core allocation in portfolios, and what segments of the market are either being disrupted by innovation (25%–30% of the S&P 500) and which companies are the real innovators (only 15%–20%)

 

You can listen to the full episode below. 

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About the Contributor
schwartzfinal
Global Head of Research
Follow Jeremy Schwartz
Jeremy Schwartz has served as our Global Head of Research since November 2018 and leads WisdomTree’s investment strategy team in the construction of WisdomTree’s equity indexes, quantitative active strategies and multi-asset model portfolios. Mr. Schwartz joined WisdomTree in May 2005 as a Senior Analyst, adding to his responsibilities in February 2007 as Deputy Director of Research and thereafter, from October 2008 to October 2018, as Director of Research. Prior to joining WisdomTree, he was head research assistant for Professor Jeremy Siegel and helped with the research and writing of Stocks for the Long Run and The Future for Investors. Mr. Schwartz also is co-author of the Financial Analysts Journal paper, What Happened to the Original Stocks in the S&P 500? He received his B.S. in Economics from The Wharton School of the University of Pennsylvania and hosts the Wharton Business Radio program Behind the Markets on SiriusXM 132. Mr. Schwartz is also a member of the CFA Society of Philadelphia.