What is the biggest recent technological revolution? In our opinion, it is Artificial Intelligence (AI). The exponential growth of data, the proliferation of the cloud, the perpetual evolution of artificial neural networks and applications around the world suggest that we are experiencing the beginnings of a profound transformation. But in a context of inflation and rate hikes, our Echiquier Artificial Intelligence fund has faced headwinds that have negatively impacted it. We remain convinced that the theme will continue its strong development.
A COMPLEX CONTEXT
In 2022, the equity markets experienced their worst performance since the 2008 crisis, while inflation became rampant, forcing central banks to react. US long rates, in particular, more than doubled from 1.5% at the beginning of 2022 to 3.5% at the end of January 2023. This surge in interest rates was reflected in the decline in company valuation multiples, which were at record levels. In this challenging environment, we focused on portfolio diversification, investing in companies that use AI to improve competitiveness, reduce costs and accelerate growth, such as Nextera Energy in renewable energy, health insurer UnitedHealth and pharmaceutical group AstraZeneca.
A BOOMING MARKET
We are positioning the fund across the entire value chain of the burgeoning AI ecosystem. Upstream is data generation, with companies like Alteryx or Snowflake that can clean data and mobilize it to feed neural networks. These are growing at a rapid pace, with an estimated doubling every two months according to NVIDIA, one of the fund’s main convictions. The rise of new generative algorithms, including ChatGPT designed by OpenAI, demonstrates the potential of this field. Microsoft has taken a 49% stake in OpenAI. We also remain positioned in cybersecurity, which remains a key issue for businesses, governments and households. Our investments in Zscaler and Palo Alto Networks reflect our conviction in this segment.
A LONG-TERM STRATEGY
From a universe of over 400 stocks detected by our semantic algorithms, our qualitative investment process selects the most promising in terms of sustainable growth, strategic leadership and technological innovation. Among the players that fit our four target profiles – AI Sellers, AI Users, AI Infrastructure Providers and AI Enablers – we favor those for whom this universal technology will have the most significant amplifying effect. Finally, a strict valuation discipline is used to build and manage our positions. Our global approach leads us to invest in any size of company, anywhere in the world and in any sector. Our portfolio of conviction is concentrated around thirty or so international stocks with a high growth profile and significant stock market appreciation potential, which we believe will enable us to capture the value creation linked to this revolution over time.
————————————————————————————–
Source: Allnews | 10 Feb 2022 | Rolando Grandi, La Financière de l’Echiquier, LFDE.
Link to the online article (FR)
Rolando Grandi, Theme-based equity manager.
Originally from Bolivia and a graduate of IAE Lyon, Rolando began his career in 2013 at La Roche Brune AM as an international equity analyst before becoming co-manager in 2015. Rolando joined La Financière de l’Echiquier in 2017 as an international equity analyst and then became a manager specializing in international and thematic equities in 2018.
La Financière de l’Echiquier (LFDE) has been investing in companies for over 30 years and is one of France’s leading entrepreneurial asset management companies. A specialist in European and international stock selection, LFDE has developed a range of responsible and thematic solutions. Present in Switzerland since 2010, LFDE manages €14.5 billion as of 31.12.2021.
————————————————————————————–
Disclaimer: The fund is mainly invested in equities and is mainly exposed to the risk of capital loss, equity risk, currency risk and discretionary management risk.
The securities are cited as examples. Neither their presence in the portfolio nor their performance is guaranteed. For more information on the characteristics, risks and fees of this fund, and before investing, we invite you to read the regulatory documents available on our website www.lfde.com.