Generali Investments' approach to investment opportunities in innovation

Innovation has a significant impact on our daily lives. It changes the way we interact in many contexts, from the way we communicate to the profession, from school to many other sectors such as mobility, healthcare, and economics.

Our investors are predominantly progressive and seek to take advantage of these forward-looking opportunities of tomorrow, today.? That’s exactly what we are striving to do in every sector of the European equity market.

In fact, another important consideration is the temporal aspect of innovation. Today's era of rapid technological advancement is allowing innovation to occur at an unprecedented rate, unparalleled in history. For example, projects that could have spanned a decade in the 1980s can now be completed in as little as 6-12 months.

It is with this accelerated timeline in mind that we approach the realm of innovation, highlighting the urgency and potential of today's investment opportunities.

Our investment process is based on differentiated stock selection, underpinned by rigorous fundamental analysis. We are convinced that the markets are not always efficient and are influenced by investors’ behavior and permanent adaptations.?

Investment approach?

Our approach is based on an in-depth bottom-up analysis that focuses on potential investments along the innovation adoption curve. This approach targets alpha-generating opportunities that we consider offering innovative advantage through revaluation opportunities (value), competitive supremacy (quality), and underestimated growth potential (unexpected and surprising growth).

Our process begins with the vast universe of European equities, which includes over 2,000 companies. Through the application of idea filters and an intensive fundamental research process, we distill this information into a targeted portfolio of 30-50 high-conviction investments.

Our main sectors are Technology, Healthcare, and Industrial Goods and Services. These distributions are very dynamic and respond to the innovation trends that we observe. For example, our allocation to the Technology sector has almost doubled from its 2021 levels.

This change can be attributed to several factors, including the exponential growth of generative AI technologies around the world. In Healthcare, cutting-edge European innovations in areas such as diabetes, obesity, and oncology have revealed several investment opportunities.

Going forward, we expect the increased integration of AI in the Healthcare sector to catalyze new breakthroughs in drug discovery, creating an even more attractive investment landscape.