The scale and influence of the sharing economy is growing, but the way in which regulators respond may influence whether you should invest in such companies.
“The sharing economy is taking off as a meaningful force in our economy,” says Mark Lin, vice-president and portfolio manager at CIBC Asset Management. He cites the popularity of ride-sharing services and new companies in the accommodation space, such as Airbnb.
As new concepts enter the market, he adds, regulators and governments will introduce rules to impact how these services influence the economy and benefit end-users.
As a result, Lin is monitoring companies in the space to see if they’re operating in ways that are sustainable, profitable and scalable.
Currently, he’s cautious about newer tech companies that “occupy overly large market shares,” given they could run into conflict with antitrust authorities. As of May 10, 2016, his fund’s top 10 holdings included legacy names such as Apple and Amazon, and established social giant Facebook.
And, “We’re monitoring the inherent risks associated with [investing in] technology,” especially when it comes to companies providing innovative services.
For more on investing in the tech sector, read: