This article was written by Endowus in partnership with Neuberger Berman.

What could be a poster child of structural trends on Earth? Perhaps, connectivity. 

The story goes way back to how humans across different continents interact more with each other. Just roughly two hundred years ago, the advent of railroads not only connected distant cities but also redefined commerce and communication—sparking an investment boom that reflected society’s newfound capacity to integrate in the 1840s.

Fast forward to the age of the internet—a virtual network linking people around the world—and today’s digital infrastructure continues this disruptive force, reshaping how we live, work, and collaborate.

For Sherrell J. Aston, Jr., managing director and portfolio manager of Neuberger Berman’s Global Equity Megatrends team, this improvement of connectivity is part of his long-term investment thesis that transcends market cycles, one that he describes as focusing on identifying visible opportunities rather than coming up with something new or chasing novelty. In his definition and rulebook of how he manages the Neuberger Berman Global Equity Megatrends Fund ("Fund"), thematic investing has to come with a framework. 

Thematic investing is not hype investing

Structural trends, or megatrends, typically describe forces that are set to transform our world over time. To Aston, instead of chasing new and short-lived market signals, his approach is anchored in identifying structural shifts that are visible, predictable, and global in scope—trends projected to endure for at least seven to ten years.

“We turn off Bloomberg, put away the Financial Times, and spend time reading periodicals and journals. Lectures, industry experts, and podcasts are our source of knowledge to identify the visible, predictable shifts.”

He continues: “This could be shifts in demographics, in the demand for certain products or services or technologies. Shifts need to be global in nature, and have a minimum of seven to ten years of visibility to them. These essentially end up being the underlying tenets of the megatrends.” 

For some sturdy, long-lasting global themes, the year count can be much longer. “A theme that has been in the portfolio for 22 years now is the “personalisation of media”, for example,” he says. This also translates into an average holding period in the Global Equity Megatrends portfolio of six and a half years. The Fund’s longest-held investment, belonging to the “personalisation of media” theme, has been in the strategy for as many as 19 years. 

Finding the linchpin to megatrends

Many investment holdings backed by Aston’s investment thesis are the “enablers” of the trends, rather than purely adopters.

“Enablers typically have a very unique product or service that gives them a wider and deeper competitive moat, which provides them with  pricing power that helps build up a competitive moat,” Aston notes. Locating that linchpin means focusing on finding the companies that form the backbone of a megatrend. 

In the Fund’s “personalisation of media” theme, for instance, instead of trying to predict which streaming service will be consumers’ favourite or screening the next viral show, the firm invests in the software and technology companies that all these services rely on. The real enablers would be something that every streaming service will depend on–a component or software that all the video-on-demand services will have to utilise. 

As proof of this investment case, his team has held one of its longest-standing investments in a software company–one that supplies primarily to telecom, satellite, and cable companies. 

According to Aston, “It does not matter which mobile applications or platforms get more subscribers; the enablers, everyone’s going to rely on them.” 

This is an approach that allows the strategy to sidestep the intense competition and uncertainty inherent in picking consumer winners, all while Netflix, Paramount+, Amazon, and many more providers pour in hundreds of millions or even billions of dollars on trying to bring that most bingeable content.

Back to rule number one

Neuberger Berman emphasises "differentiated alpha," which means generating excess returns through picking stocks that might not be found in the benchmark. The differentiated alpha is not just the returns generated, but how much risk one takes to get them. Their portfolio tends to aim for a more balanced set of returns from a larger number of businesses with lower embedded valuations.

“We are big believers that successful long-term returns are generated by managing risk. One of the ways we manage risk is by placing emphasis and focus on valuations,” Aston says. 

Another caution is that great stories tend to generate great excitement—a trend repeatedly evident in market history. The early 2000s witnessed the dotcom boom—and subsequent bust—fueled by widespread enthusiasm about the Internet's transformative potential. Ultimately, expectations for new digital business models proved markedly overblown.

Fast forward to today, the initial infrastructure, born out of the need to correct the mismatch between hype and reality, has evolved into a sprawling yet dynamic ecosystem. Continuous enhancements in connectivity remain at the core of many long-term investment themes.

Over the years, Aston has focused on a framework that enables investing through market and economic cycles by “aiming to own pieces of companies over many years.” Throughout this time, he and his team have remained true to a fundamental investment truth: “People try, but timing cycles is just impossible,” says Aston.

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Neuberger Berman, founded in 1939, is a private, independent, employee-owned investment manager. The firm manages a range of strategies—including equity, fixed income, quantitative and multi-asset class, private equity, real estate and hedge funds—on behalf of institutions, advisors and individual investors globally. With offices in 26 countries, Neuberger Berman’s diverse team has over 2,600 professionals.

Endowus has four funds from Neuberger Berman (as of 31 May 2025), including the Neuberger Berman Global Equity Megatrends Fund and the Strategic Income Fund. Get started building your own portfolio with these funds on the Endowus Fund Smart platform.

The article was an interview between the Insights team at Endowus and Sherrell J. Aston, Jr., managing director and a portfolio manager on the Global Equity Megatrends team at Neuberger Berman. The views expressed in this article are attributed to Neuberger Berman in its entirety. 

A special treat for you

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