COVID-19 digitalisation pays-off
Global equity funds that have strong holdings in technology were rewarded by the catalyst of digitalisation during the COVID-19 pandemic.
According to FE Analytics, within the Australian Core Strategies universe, the global equities sector had returned an average of 8.58% over the previous year to 31 May, 2020.
The best performing fund was CFS FC Baillie Gifford Wholesale Long-term Global Growth which returned 62.05%.
This was followed by Perpetual Global Innovation Share returned (36.55%), Lakehouse Global Growth (34.05%), Betashares Global Sustainability Leaders ETF (33.05%) and Loftus Peak Global Disruption (32.46%).
The CFS Baillie Gifford fund cited Tesla, Amazon, Tencent, Netflix, NVIDIA, Alibaba and Zoom as being amongst its top contributors over the last three months to 30 April, 2020.
Perpetual’s Global Innovation Share invested in funds that benefitted “from technological change and innovation”.
Its top holdings included Zoom; electronic design automation company, Synopsys; and business communication platform, Slack.
The Loftus Peak fund focused on investing in listed “disruptive” businesses and its major tech holdings included Amazon, Qualcomm, Alphabet and Tencent.
In its most recent monthly review, Loftus Peak said the past three months saw an acceleration of the move towards digitisation due to the COVID-19 pandemic.
“This has been in train for 20 years, of course, with the difference that the virus has forced significant additional adoption of digital tools to work, bank, shop and be entertained, whether by conferencing on-line or through already popular applications,” it said.
“We believe that a good number of these practices will stick after COVID-19 passes.
“In turn, this has driven very strong growth in revenues for a number of our well-placed investee companies.”
The Lakehouse fund, which held Paypal, Facebook, Amazon and Alphabet, said it also benefitted from COVID-related changes, as of 31 May.
“We were in the right place, to some extent, but our general bias towards companies with robust balance sheets and leading positions in growing markets is also a deliberate stylistic choice intended to help us preserve capital during recessions,” it said.
“It helps that we also increased the fund’s investments in such companies during the downturn, initiated new positions in others, and continued our long-standing practice of side-stepping notoriously cyclical, competitive, or capital-hungry companies and industries.”
The environmental, social and governance (ESG) focused BetaShares Global Sustainability Leaders ETF, which was certified by the Responsible Investment Association of Australia (RIAA), major tech holdings included Apple, NVIDIA, Adobe, PayPal and Netflix.
Best performing global equity funds over one year to 31 May 2020
AUTHOR
Chris Dastoor
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