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Capturing the 'new economy': Kensho's 21st century sectors

CNBC on Monday is initiating a new way to look at the global economy —specifically a new way to look at a very important part of that economy: the "new economy."

We're launching a new set of tools in conjunction with our partners at Kensho that we and our viewers can use to better understand the rapidly changing economy and investing landscape.

They're called Kensho New Economy Indices, a series of 16 indexes that provide ways to invest in disruptive technologies and trends using the existing public markets.

By the "new economy," we're talking about industries that are poised to grow rapidly in the next decade, and grow fast: The phrase "exponential growth" is often used. But what exactly is it? And more importantly how do you measure it, and how can you invest in it?

Let's take space. The Kensho Space Index is composed of 30 U.S.-listed companies focused on space-related activities as a principal component of their business strategy as well as the supply-chain companies involved in the industry.

The commercialization of space is one of the great stories for the 21st century. When you think about the commercialization of space, you probably think about SpaceX, the firm founded by Elon Musk to create technologies that will reduce the cost of space transportation and hopes to enable the colonization of Mars. Or Virgin Galactic, founded by Sir Richard Branson to provide suborbital spaceflights for tourists.

But corporate America is very involved in the space industry. Many old-school companies that you know are heavily invested in the "new economy," but you likely don't know it. Several large companies that have significant exposure to space are represented in the Kensho Space Index, including Boeing, Honeywell, Lockheed and United Technologies but also a few not obvious: Heico Corp., for example.

Why Heico, an aerospace electronics manufacturer? They are part of the "supply chain," providing their microwave technology for use in such things as the Mars Rover and other spacecraft with missions into deep space.

Given all the interest in space, it should not be surprising to learn that the Kensho Space Index is at a historic high.

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Inok | E+ | Getty Images

Or take autonomous vehicles. The entire transportation industry — from autos to trucking — is looking at developing autonomous vehicles. The Kensho Autonomous Vehicles Index is composed of companies developing autonomous transportation, whether directly through the development of autonomous vehicles themselves or as part of the ecosystem supporting these initiatives. It includes obvious choices likeTesla, Ford and Toyota, but also smaller companies like Wabco Holdings, which makes electronic braking systems critical to the development of autonomous vehicles.

There are additional indexes for robotics, cybersecurity, nanotechnology, genetic engineering, virtual reality, 3-D printing and new manufacturing, drones and others.

These broad industries encompass companies that often work across many of the "old-school sectors" that we traditionally put stocks into: technology, industrials, materials, for example. That's why, if you want to capture the new economy, there's a need to look at stock investing beyond the "old-school sectors."

How does Kensho put the indexes together? Using big data analytics and natural language programming, it scours millions of pages of financial statements and other public information to identify the constituents of each index, and weigh each according to the degree to which a given industry is central to the company's strategy. It even takes into account the liquidity of these stocks to ensure they are tradable.

You can examine the underlying stocks for all 16 indices here: http://cnb.cx/2aG3mDz.

I plan to leverage these indexes on a regular basis in to show you how you can invest in the new economy.

Disclosure: NBCUniversal, parent of CNBC, is a minority investor in Kensho.

  • Bob Pisani

    A CNBC reporter since 1990, Bob Pisani covers Wall Street from the floor of the New York Stock Exchange.

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