Industrials offer value opportunities at the core of the production and consumption economy, where businesses with long-term contractual relationships can benefit from dependencies in the value chain. Valuations will favor those who can meaningfully forecast demand and maintain pricing with differentiated products. In 2020, we noticed the gap between the strong investor demand for industrial sector funds and the paucity of funds coming to market.
Health Care adjusted to the rapid decline in face-to-face visits giving way to technology solutions and virtual MDs. The rise in behavioral health, the backlog of delayed elective surgery, procedures, and telemedicine are among the drivers of value creation and a reimagined customer experience in the coming decade.
Business Services companies offering tech-enabled improvements in compliance, workforce management, and education continue to receive premium valuations. Domestic and global expansion opportunities provide multiple ways to win. Outsourcing is expected to provide a meaningful tailwind for 2021 as companies seek balance sheet optimization.
The Technology landscape provides a watershed of winners and losers following decades of disruption. Categories such as big data, robotics, and automation are penetrating old economy segments and boosting efficiency.
Real Estate survival is bifurcated between those assets forced to shut down and those that must stay open. Once burgeoning office buildings, malls, and hotels became vacant mausoleums of steel and granite. Investors knowingly kicked the can on rent and mortgage forbearance into 2021, creating an unstable credit risk profile as well as generational opportunities.