Innovation is everywhere

20 December 2022 by National Bank Investments

It’s not just about technology. Innovation extends beyond traditional tech driven applications. It can be delivered in the form of products, services, or business models. Most innovative companies have the following characteristics in common: leadership team’s focus on innovation, investment in research and development, and solutions in the form of new products or services brought forth as a result of R&D effectiveness.

“Innovation distinguishes between a leader and a follower.” — Steve Jobs

People tend to think of innovative companies as start-up companies driving change in the tech sector however innovation exists in all industries. These innovative companies can be either long standing, stable, or growth companies with track records that continue to innovate themselves through R&D. Examples of these can be either:

Tech driven
- Cloud computing
- 5G mobile broadband
- Artificial intelligence (AI)
Tech enabled
- Autonomous driving or ride sharing apps
- Traditional retailers offering flexible pickup options
- Internet of Things assist in digital asset management with predictive maintenance
Non-tech
- Athletic apparel with innovative fabrics
- Hydrogen as a potential substitute for fossil fuels
- Skincare and cosmetics with personalized service and products

Why report investment in R&D?

Companies within the Russell 1000 benchmark, as shown below, that continuously focus on R&D despite economic headwinds, challenge the status quo. This promotes growth which in turn also leads to stronger shareholder returns. In simpler terms, companies that report investments in R&D tend to outperform those that don’t.

Growth of $100

Image of a graphic about Russell 1000 Index compagnies.

Russell 1000 Index companies. Source: J.P. Morgan Investment Management

Explore opportunities across all innovation driven sectors

High growth are the next up-and-comping names that we may not all know about but that are in markets that are ripe for disruption.
Growth companies challenge the status quo with a good mix of growth and profitability.
Stable and mature companies are growth names that are rethinking how they can make change and create new opportunities.
And lastly, cyclicals are focused on products and services that are in demand that help drive up higher margins.

Discover the NBI Innovators Fund sub-advised by J.P. Morgan Investment Management and ask your investment advisor to include it in your portfolio to further its diversification.

NBI Innovators Fund

The Fund aims to aggressively seek capital appreciation for investors over the long term primarily by investing in global companies whose activities are partially focused on scientific and technological research.

Legal notes

The information and opinions herein are provided for information purposes only and are subject to change without notice. The opinions are not intended as investment advice nor are they provided to promote any particular investments and should in no way form the basis for your investment decisions. National Bank Investments Inc. has taken the necessary measures to ensure the quality and accuracy of the information contained herein at the time of publication. It does not, however, guarantee that the information is accurate or complete, and this communication creates no legal or contractual obligation on the part of National Bank Investments Inc.

NBI Funds (the “Funds”) are offered by National Bank Investments Inc., a wholly owned subsidiary of National Bank of Canada. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus of the Funds before investing. The Funds’ securities are not insured by the Canada Deposit Insurance Corporation or by any other government deposit insurer. The Funds are not guaranteed, their values change frequently and past performance may not be repeated.

The NBI Portfolios (the “Portfolios”) are offered by National Bank Investments Inc., a wholly owned subsidiary of National Bank of Canada. Commissions, trailing commissions, management fees and expenses all may be associated with mutual fund investments. Please read the prospectus of the Portfolios before investing. The Portfolios’ securities are not insured by the Canada Deposit Insurance Corporation or by any other government deposit insurer. The Portfolios are not guaranteed, their values change frequently and past performance may not be repeated.

® NATIONAL BANK INVESTMENTS is a registered trademark of National Bank of Canada, used under licence by National Bank Investments Inc.

National Bank Investments is a member of Canada’s Responsible Investment Association and a signatory of the United Nations-supported Principles for Responsible Investment.