In the fast-paced realm of technological innovation, the digital economy has emerged as a transformative force, reshaping the way we work, live and play. It is estimated it already makes up around 10% of US GDP* and is continuing to grow, supported by the rise of AI, dominance of e-commerce and increased opportunities for hybrid working. “The fourth industrial revolution”, as it has become known, is therefore providing significant opportunities for investors.

In this article, Matthew Norris, Lead Adviser to the VT Gravis Digital Infrastructure Income strategy, explores the impact of the digital economy on our daily lives, and outlines why investing in digital infrastructure is a good choice for any diversified portfolio.

The Covid-19 pandemic has redefined the idea of the workplace, with companies moving away from the traditional office to a hybrid or remote working environment, ushering in an era of digital collaboration. This has caused cloud computing, high-speed internet, and advanced communication technologies to become indispensable tools for businesses worldwide, with an increasingly remote workforce re-emphasising the critical nature of connectivity, as well as the resilience of communications infrastructure. As businesses strive to adapt to this new work paradigm, investors in the digital infrastructure sector are set to benefit from the increased demand for data centres from governments, corporations, and individuals.

The rise of e-commerce has revolutionised the way we shop and conduct our business online, with the digital economy continuing to drive and expand the retail landscape. With consumers turning to online platforms for their purchasing needs, digital infrastructure supporting e-commerce has become a linchpin of the global economy. More and more urban logistics and e-commerce fulfilment centres are facilitating real-time tracking of shipments, inventory management, and order fulfilment, which improves the overall efficiency of the e-commerce supply chain.

As well as transforming our working lives, recreation has also undergone some major changes. The way we watch TV, listen to music and play computer games have all been revolutionised in the past few years making telecoms towers and 5G networks crucial to our enjoyment. The monthly global average data usage per smartphone – which nowadays allow us to literally hold our lives in our hands - is expected to exceed 50GB in 2028**. Meanwhile, the number of 5G subscribers globally is set to grow from 1.1bn to 4.6bn by the same year**. Three years earlier, in 2025, the amount of data used to create, capture, copy and consume information worldwide through social media, streaming and artificial intelligence is expected reach a milestone of 200 zetabytes - a 10-fold increase in just a decade***.

The VT Gravis Digital Infrastructure Income Fund invests in ‘next generation’ listed infrastructure companies operating at the intersection of real estate and technology. These companies are vital to the functioning of the digital economy and are active in four specialist sub-sectors: logistics warehouses supporting e-commerce, communication towers enabling 5G, data centres housing the next-generation of AI, and fibre-networks linking everything together.  

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*Bureau of Economic Analysis, US Department of Commerce, November 2022

*Source: Ericsson, ‘Mobile Subscriptions Outlook’, June 2023

**Source: Statistica

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VT Gravis Digital Infrastructure Income Fund, a sub-fund of VT Gravis Real Assets ICVC, is a UCITS Scheme Open Ended Investment Company (“OEIC”). 

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