Investment Insight
5 Big Disruptive Trends Investors Should Watch

Investment Insight

5 Big Disruptive Trends Investors Should Watch


It’s hard to think of an industry that won’t be touched in some way by technological disruption over the next decade. That’s why Morgan Stanley Investment Management’s Growth Team has a disruptive change researcher. The Team’s disruptive change researcher works with portfolio managers to detect big ideas and emerging trends that have far-reaching implications for economies, industries and social behavior.

Because disruptive change is so pervasive, the Growth Team looks at all of their investments through a disruptive lens. The disruptive analysis effort is really about supporting the Growth Team’s strategy of long-term investing, finding companies with a sustainable competitive advantage, and making sure that they aren’t holding companies that could be left behind.

Here are five big disruptive trends that the Growth Team is currently working on, as well as industries that could be affected and what they think investors should watch out for:

1. Machine Learning

Machine learning has the potential to be one of the biggest disruptors over the next decade with the transportation and medical industries likely to be first in line for disruption. Machine learning is really all about pattern recognition. In the future, we might see radiology and scans detecting cancers earlier than they’re detected today. Machine learning could someday be used to scan for genes that predispose us to certain kinds of diseases.

To keep abreast of the change ahead, the Growth Team believes investors should “follow the data.” Whoever owns the data will own the technology because machine learning is only as good as the data that gets fed into it.

One of the biggest investment risks is regulation. Industries that could be disrupted might seek new regulations and other protections against disruption. Investors should watch this, particularly in already regulated fields such as medicine and transportation.

2. Autonomous Vehicles

Autonomous driving will be facilitated by the data-processing capabilities of machine learning, but its disruption capabilities are so widespread that the Growth Team considers it a separate category.

With autonomous vehicles, transportation can largely be converted to ride-sharing. Cars are typically the most expensive purchase after a home and are costly to maintain. With 90% of accidents caused by human error1, regulators and consumers are also expected to be interested in autonomous vehicles as a potentially safer alternative.

Other industries may be indirectly affected. On average, a commuter spends 55 minutes a day driving2, so that’s time they get back. One of the things they are likely to do with all that time is to use mobile web services, which the Growth Team thinks could be big beneficiaries.

Investors should also carefully watch what the incumbents in the car industry do. Are they acknowledging this disruptor on the horizon? And what are they planning to do about it? Some have made strategic moves, but some have not, notes the Growth Team. As with other disruptive changes, regulation will also play a role in determining where and how soon autonomous driving becomes a reality.

3. Augmented Reality

Augmented Reality (AR) is an exciting technology that will likely have multiple applications. The Growth Team sees this being useful in education and training because it essentially overlays virtual images onto reality. AR can simulate real-world scenarios. This allows orientations or training to take place in a safe environment versus a real-world environment that can be more dangerous. Surgeons might be able to practice complex procedures before operating on patients, for instance. AR might also have entertainment value, by enabling consumers to enjoy unique experiences like sitting on the field at a sporting event or traveling to exotic locations.

AR is in the early stages of development, so the full potential will unfold over time.

4. Blockchain

In theory, Blockchain could disrupt any transaction that requires sharing a document or contract. Financial firms are most likely to see disruption because Blockchain’s shared-ledger approach could dramatically affect the time, cost and complexity around how transactions are recorded and how custodial business is done. If Blockchain software is developed and trade data is kept on one shared, encrypted ledger that is updated in real time and openly available to participants in the transaction, mistakes, such as instances where ownership claims have been made on more shares than a company has issued, will be relegated to the past.

The Growth Team believes that the real-estate market could also benefit from Blockchain, especially in certain emerging markets where centralized record-keeping can be subpar. Investors should keep watch on regulations that might impact Blockchain’s use. The Growth Team believes the big risk is institutional pushback. There are many people in organizations whose jobs can be eliminated with the adoption of Blockchain.


CRISPR is a new tool for genetic research that allows scientists to locate specific segments of DNA and then easily replace or delete them. This could cause huge disruption to the way healthcare is delivered today. It offers the ability to cure a disease at the genetic level. For investors, it has the potential to create new industries and disrupt existing medical treatments.

Investors should watch research and development in the healthcare industry. Companies that are spending money on research and development, rather than concentrating on short-term return of capital, like share buybacks, are the ones to focus on. Investing in biotechnology, however, is difficult, even for professional portfolio managers. Biotechnology is likely the riskiest of all disruptive technologies to invest in. These companies are usually early-stage companies, with no proven cash flow. It’s also very difficult to know what to invest in, unless you have expertise in a specific area of biology. Even then, it can be very tricky to anticipate which companies will receive Food & Drug Administration approval and a path to success.


Select PDF

Right Click Edit

Select PDF

Right Click Edit



1U.S. Department of Transportation, National Highway Traffic Safety Administration, Crash Stats as of February 2015.

2U.S. Department of Transportation, Bureau of Transportation Statistics, National Household Travel Survey, 2001-2002.

Important Information

The views and opinions are those of the author as of the date of publication and are subject to change at any time due to market or economic conditions and may not necessarily come to pass. Furthermore, the views will not be updated or otherwise revised to reflect information that subsequently becomes available or circumstances existing, or changes occurring, after the date of publication. The views expressed do not reflect the opinions of all portfolio managers at Morgan Stanley Investment Management (MSIM) or the views of the firm as a whole, and may not be reflected in all the strategies and products that the Firm offers.

Forecasts and/or estimates provided herein are subject to change and may not actually come to pass. Information regarding expected market returns and market outlooks is based on the research, analysis and opinions of the authors. These conclusions are speculative in nature, may not come to pass and are not intended to predict the future performance of any specific Morgan Stanley Investment Management product.

Certain information herein is based on data obtained from third-party sources believed to be reliable. However, we have not verified this information, and we make no representations whatsoever as to its accuracy or completeness.

The information herein is a general communications which is not impartial and has been prepared solely for information and educational purposes and does not constitute an offer or a recommendation to buy or sell any particular security or to adopt any specific investment strategy. The information herein has not been based on a consideration of any individual investor circumstances and is not investment advice, nor should it be construed in any way as tax, accounting, legal or regulatory advice. To that end, investors should seek independent legal and financial advice, including advice as to tax consequences, before making any investment decision.


Investing involves risks, including the possible loss of principal. There is no assurance that a strategy will achieve its investment objective. Portfolios are subject to market risk, which is the possibility that the market values of securities owned by the portfolio will decline. In general, equity securities’ values also fluctuate in response to activities specific to a company.

This communication is not a product of Morgan Stanley’s Research department and should not be regarded as a research recommendation. The information contained herein has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on dealing ahead of the dissemination of investment research.

This communication is only intended for, and will be only distributed to, persons resident in jurisdictions where such distribution or availability would not be contrary to local laws or regulations.

There is no guarantee that any investment strategy will work under all market conditions, and each investor should evaluate their ability to invest for the long-term, especially during periods of downturn in the market. Prior to investing, investors should carefully review the strategy’s / product’s relevant offering document. There are important differences in how the strategy is carried out in each of the investment vehicles.


This communication was issued and approved in the United Kingdom by Morgan Stanley Investment Management Limited, 25 Cabot Square, Canary Wharf, London E14 4QA, authorized and regulated by the Financial Conduct Authority, for distribution to Professional Clients only and must not be relied upon or acted upon by Retail Clients (each as defined in the UK Financial Conduct Authority’s rules).

Financial intermediaries are required to satisfy themselves that the information in this document is suitable for any person to whom they provide this document in view of that person’s circumstances and purpose. MSIM shall not be liable for, and accepts no liability for, the use or misuse of this document by any such financial intermediary. If such a person considers an investment she/he should always ensure that she/he has satisfied herself/himself that she/he has been properly advised by that financial intermediary about the suitability of an investment.


A separately managed account may not be suitable for all investors. Separate accounts managed according to the Strategy include a number of securities and will not necessarily track the performance of any index. Please consider the investment objectives, risks and fees of the Strategy carefully before investing. A minimum asset level is required. For important information about the investment manager, please refer to Form ADV Part 2.

Please consider the investment objectives, risks, charges and expenses of the funds carefully before investing. The prospectuses contain this and other information about the funds. To obtain a prospectus please download one at or call 1-800-548-7786. Please read the prospectus carefully before investing.

Morgan Stanley Distribution, Inc. serves as the distributor for Morgan Stanley funds.


Hong Kong:

This document has been issued by Morgan Stanley Asia Limited for use in Hong Kong and shall only be made available to “professional investors” as defined under the Securities and Futures Ordinance of Hong Kong (Cap 571). The contents of this document have not been reviewed nor approved by any regulatory authority including the Securities and Futures Commission in Hong Kong. Accordingly, save where an exemption is available under the relevant law, this document shall not be issued, circulated, distributed, directed at, or made available to, the public in Hong Kong.


This document should not be considered to be the subject of an invitation for subscription or purchase, whether directly or indirectly, to the public or any member of the public in Singapore other than (i) to an institutional investor under section 304 of the Securities and Futures Act, Chapter 289 of Singapore (“SFA”), (ii) to a "relevant person" (which includes an accredited investor) pursuant to section 305 of the SFA, and such distribution is in accordance with the conditions specified in section 305 of the SFA; or (iii) otherwise pursuant to, and in accordance with the conditions of, any other applicable provision of the SFA. In particular, for investment funds that are not authorized or recognized by the MAS, units in such funds are not allowed to be offered to the retail public; any written material issued to persons as aforementioned in connection with an offer is not a prospectus as defined in the SFA and, accordingly, statutory liability under the SFA in relation to the content of prospectuses does not apply, and investors should consider carefully whether the investment is suitable for them.


This publication is disseminated in Australia by Morgan Stanley Investment Management (Australia) Pty Limited ACN: 122040037, AFSL No. 314182, which accept responsibility for its contents. This publication, and any access to it, is intended only for “wholesale clients” within the meaning of the Australian Corporations Act.

Morgan Stanley Investment Management is the asset management division of Morgan Stanley.

© 2017 Morgan Stanley. All rights reserved.

It is important that users read the Terms of Use before proceeding as it explains certain legal and regulatory restrictions applicable to the dissemination of information pertaining to Morgan Stanley Investment Management's investment products.

The services described on this website may not be available in all jurisdictions or to all persons. For further details, please see our Terms of Use.

Not FDIC Insured—Offer No Bank Guarantee—May Lose Value
Not Insured By Any Federal Government Agency—Not A Deposit

Privacy & Cookies    •    Terms of Use

©  Morgan Stanley. All rights reserved.

Morgan Stanley Distribution, Inc. Member FINRA/SIPC.