ETF expert describes 3 megatrends that will become permanent changes

Jeff Spiegel, US Head of BlackRock Megatrend, International and Sector ETF, joins Yahoo Finance to explain investing in megatrend ETFs for industrial and tech innovations, as well as ETFs focusing on blockchain technologies and global food production.

Video Transcript

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RACHELLE AKUFFO: Welcome back, everyone. For people looking to enter the market during this pullback and wondering if ETFs are the way in, our next guest has plenty of insight. Let's welcome Jeff Spiegel, US Head of BlackRock Megatrend International and Sector ETF as part of our ETF report brought to you by Invesco QQQ.

So Jeff, good to have you on here. So for people who are new to ETF investing, what should they be asking themselves when they look at what's happening with all this volatility?

JEFF SPIEGEL: Rachelle, a pleasure to be with you. And we hope what people are asking themselves is what are the permanent changes that are happening out there in the world today that can drive exponential growth opportunities going forward? And so we actually just published a paper. We call it the Great Acceleration, where we're trying to answer exactly that question.

I think it probably goes without saying that there are themes that are long term and powerful, think about cybersecurity and cloud, that we would have loved to have been investing in just prior to the pandemic, right, just prior to permanent changes taking place that made cybersecurity and cloud that much more powerful. And those two represented by IHAK, I-H-A-K and IDAT within our lineup. But really, what's next, right?

We're in another point of turmoil in the world. We have inflationary challenges. We have geopolitical challenges. We have reshoring challenges. And so the three areas that we've really laid out are, first, an industrial renaissance. So here we're looking at really the solutions, to those supply chain, inflation, labor shortage issues, be it robotics and automation.

We're looking at the next generation of medical breakthroughs as RNA vaccines are transferred to a focus on influenza, HIV and other areas as well as advancements in precision medicine. Last, but certainly not least, we're looking at the rise of the new consumer. Emerging market consumers make up 50% of global spending today. Millennials are reaching peak spending age.

And what's funny, actually, is I was listening to the earlier segment here. You guys were actually hitting on exactly these subjects, the transition of mRNA vaccines from one of the leading companies to new implementations. You were talking about one of the major shoe manufacturers having a challenge verifying the authenticity of its shoes, and then one of the largest, if not the largest fast food chain, starting to offer more sustainable solutions.

And those last two hit on the rise of the new consumer, who prefers decentralized finance, who wants to verify their transactions, for example, the purchase of shoes maybe through a blockchain or those consumers who want a more sustainable solution through protein alternative.

RACHELLE AKUFFO: So it sounds like you're saying people shouldn't really sort of be panicking based on what they're seeing in the market now. Really they should be looking ahead at the trends and positioning themselves that way. So I'm going to break some of this down, because you mentioned obviously COVID putting mRNA vaccines in the forefront and some of these other building blocks that are really transforming digital, and physical, and health space. How do you see growth in that space and in turn the investments that you think we'll see there?

JEFF SPIEGEL: So two of the products that we just launched in conjunction with this great acceleration paper are IBLC, our blockchain ETF and IVEG, I-V-E-G, our future of food ETF. And I can give you some of the thesis here. And I should note one of the privileges I have of being at BlackRock and leading our Megatrend platform is we're taking insights across index investors as well as active investors.

So a lot of what you're hearing here is actually the insights of our active portfolio managers. And let's start on the blockchain side. So a blockchain protocol, just to, sort of, level set, has three key concepts-- peer to peer transactions, digital scarcity, and immutable records. And we think there's some really powerful opportunities here.

So for one thing, crypto assets empower the unbanked and allow users to regain control of the $150 billion annual market with their personal data. And so even though 2.5 billion people lacked access to banking, 60% of them have access to a smartphone. That means a blockchain solution can get them into that banked ecosystem. And in terms of that verification, we're talking about with that sneaker verification problem, 2 billion people worldwide are expected to buy goods and services online. So verification through a blockchain is a really powerful solution.

And that's just when you think about on a transaction basis. Cryptocurrencies are transforming rapidly. So CBDCs or government-backed cryptocurrencies are currently being explored by 87% of countries that represent 90% of the world's GDP. So we're trying to capture all of that in IBLC.

In IVEG, on the future of food side, there are a number of challenges in the short term that need to be addressed. So the most obvious is that global food production is failing to meet the nourishment needs of nearly a billion people around the world. The second of which such production is actually leading to 34% of global emissions. And then also, traditional proteins can cause a lot of health issues, be it obesity or heart disease.

And it looks like the solutions are proliferating rapidly. Plant-based sales reached $7 billion in the US in 2020, rising 27%. Plant-based meat sales specifically grew 45%. And I think what's powerful about that is plant-based meats can actually reduce CO2, water, and land usage by 75% compared to traditional alternatives. In fact, traditional proteins when raised as livestock consume significantly more calories than they produce.

So take all of that and combine it with the fact that you can produce a 100% restaurant quality lab-grown steak that tastes as good as the real thing for $12 per 4 ounces and you can see the opportunity ahead.

RACHELLE AKUFFO: Indeed. Well, thank you so much. Lots of great insights there. Jeff Spiegel, US Head of BlackRock Megatrend International and Sector ETF. Thank you so much for joining me today.