Global Technology strategy: As of January, our investments have delivered encouraging earnings results for Q4 2020

  • 08 February 2021 (5 min read)

Key points

  • New virus variants drove markets lower
  • Our strategy outperformed the broader Technology Equity index
  • Positive performance from our Chinese investments

What’s happening?

Global equity markets started the year in positive territory but subsequently fell towards the end of the month, with the MSCI World declining 1.4%1  in January. The technology sector outperformed with the MSCI World Information Technology index, declining 1.0%1 .  [All index returns provided in GBP].

Despite the vaccination rollout being underway in the US and Europe, new variants of the virus created cause for concerns, as governments may have to establish a more prolonged series of measures to limit the spread. Asia Pacific excluding Japan, where the pandemic seemed to stay under control, performed better than Europe and North America.

Portfolio positioning and performance

The Global Technology strategy outperformed the broader Technology Equity index (MSCI World Information Technology) in January, as several of the themes we invest into continued to perform well.  The top performing stocks in the fund during the month included Ocado, the UK online grocery business and our Chinese investments, Tencent and Alibaba. Additionally, several of our semiconductor investments also performed well including Cirrus Logic, Applied Materials and Taiwan Semiconductor.

Our exposure to online payments specialist Visa, Global Payments and Fidelity National Information Services detracted to performance, mostly driven by the current uncertainty surrounded by the coronavirus situation and the timing of a recovery in cross border and offline payment volumes.

During January, we sold the remainder of our positions in cybersecurity firms, Mimecast and Sailpoint and video games publisher, Electronic Arts as we had concerns around the Codemasters acquisition (video game developer) and the end of the exclusivity deal with the Star Wars franchise. We added Equinix to the portfolio, a global leader in datacentre colocation and interconnection services, operating over 200 datacentres worldwide. Equinix should continue to benefit from the elevated demand for digital infrastructures.

Outlook

With President Joe Biden being inaugurated during the month, the geopolitical tension and turmoil that was a persistent presence during Donald Trump’s presidency feels to have eased already.

Earning season has started, and so far, we have seen good results and constructive commentary with regards to 2021 from the companies we are invested in.

The semiconductor sector in which we have good exposure to within the fund is benefiting from robust demand from a variety of end markets including compute, smartphones, automotive, industrial to name a few.  The dynamics driving this demand supports our decision to have been overweight the semiconductor sector over the last several years.

No assurance can be given that the Global Technology Strategy will be successful. Investors can lose some or all of their capital invested. The Global Technology strategy is subject to risks including; Equity; Smaller companies; Currency; Industry sector or region; Changing technology; Emerging markets; Liquidity.

  • Bloomberg as of 30/01/21
  • Bloomberg as of 30/01/21

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    Due to its simplification, this publication is partial and opinions, estimates and forecasts herein are subjective and subject to change without notice. There is no guarantee forecasts made will come to pass. Data, figures, declarations, analysis, predictions and other information in this publication is provided based on our state of knowledge at the time of creation of this publication. Whilst every care is taken, no representation or warranty (including liability towards third parties), express or implied, is made as to the accuracy, reliability or completeness of the information contained herein. Reliance upon information in this material is at the sole discretion of the recipient. This material does not contain sufficient information to support an investment decision.

    All investment involves risk , including the loss of capital. The value of investments and the income from them can fluctuate and investors may not get back the amount originally invested.

    Disclaimer

    This website is published by AXA Investment Managers Australia Ltd (ABN 47 107 346 841 AFSL 273320) (“AXA IM Australia”) and is intended only for professional investors, sophisticated investors and wholesale clients as defined in the Corporations Act 2001 (Cth).

    This publication is for informational purposes only and does not constitute investment research or financial analysis relating to transactions in financial instruments, nor does it constitute on the part of AXA Investment Managers or its affiliated companies an offer to buy or sell any investments, products or services, and should not be considered as solicitation or investment, legal or tax advice, a recommendation for an investment strategy or a personalized recommendation to buy or sell securities.

    Due to its simplification, this publication is partial and opinions, estimates and forecasts herein are subjective and subject to change without notice. There is no guarantee forecasts made will come to pass. Data, figures, declarations, analysis, predictions and other information in this publication is provided based on our state of knowledge at the time of creation of this publication. Whilst every care is taken, no representation or warranty (including liability towards third parties), express or implied, is made as to the accuracy, reliability or completeness of the information contained herein. Reliance upon information in this material is at the sole discretion of the recipient. This material does not contain sufficient information to support an investment decision.

    All investment involves risk , including the loss of capital. The value of investments and the income from them can fluctuate and investors may not get back the amount originally invested.