Invest in Innovation: What is this new investment strategy and should you go for it?

economictimes.indiatimes.com:

According to fund managers, innovation is a misunderstood concept. It is not limited to the narrow confines of technology. Innovation can happen anywhere, in any form, and technology is only one of the channels for innovation.

It is not restricted to creation of a new product or service, but extends to improvements in processes and reinvention of business models. As part of the investible universe for innovative businesses, AMCs are targeting diverse ideas like process re-engineering, superior logistics, improved product design, transformative business model, etc. Innovators are not restricted to any market cap and have presence across sectors, such as automobiles, financial services, FMCG and healthcare, among others.

These schemes may also invest in companies that will become beneficiaries of innovation. Vinay Sharma, Fund Manager, Equity Investments, Nippon India AMC, asserts, “Indian businesses are rapidly moving up the value chain, riding on innovation. The new fund aims to capture this opportunity.”Pace of innovation is picking up Let’s look at some examples.

ITC’s Internet-based supply chain initiative, e-Choupal, directly links rural farmers with companies for procurement of agricultural produce. It has helped reduce transaction costs for the company, while enabling farmers to tweak the type and quality of crops as per prevailing trends. Harnessing analytics, Bajaj Finance pioneered a successful lending model in small-ticket consumer loans centered on quick disbursement and no-cost EMIs.