HEAD-TO-HEAD: Gam versus Guinness

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Darius McDermott, Chelsea Financial Services

Introduction

Disruptive and innovative technology themes resonate powerfully among fund houses and investors. There are widespread expectations for the long-term commercial and societal transformations promised by new and evolving technologies.

These themes have been captured by dedicated funds, and investment products have become increasingly specific, as particular trends are identified and promoted.

They include advanced healthcare, artificial intelligence and big data, clean energy and sustainability, cloud computing, internet, smart cities, electric vehicles, media and entertainment, mobile technology and the internet of things, next generation consumer, payments and Fintech, robotics and automation.

The so-called “interactive sector”, which includes e-commerce firms, and providers of online video games, online advertising, interactive software, fintech, big data analytics tools and healthcare IT and other beneficiaries of the roll-out of 5G technologies make-up an increasing investible universe.

The Covid-19 pandemic and resulting lockdowns have given a boost to many of these trends, according to analysts and asset managers.

“The pandemic has accelerated digitalisation, pushing up internet usage and allowed millennials to speed up the transition to a fully interactive world,” Anjali Bastianpillai, a senior product specialist for digital funds at Pictet Asset Management, told FSA.

She highlighted cloud services without which businesses would have “ground to a halt” during the enforced shift to home-working; e-commerce which should maintain its momentum as “consumers will be slow to return to ‘bricks-and-mortar’”, and the popularity of video streaming and online gaming for entertainment.

“All these digital transformations are leading to more data crunching and better use of artificial intelligence (AI), confirming our belief in the secular growth of data driven web-based businesses,” said Bastianpillai.

However, as lockdown restrictions are eased, perhaps people will want to return to more social activities, and some of these apparently ineluctable trends might stall.

Regulation might also have an impact.

For instance, a year ago it was difficult to argue with experts predicting the further growth of China’s online education and gaming sectors, or the continued dominance of the country’s leading tech companies. Beijing’s recent crackdown on some of China’s growth sectors might persuade investors to be cautious.

In the end, most professional investors are likely to maintain their focus on key metrics, such as quality, revenue and profit growth, and valuation, as well as momentum.

Against this background, FSA asked Darius McDermott, managing director, Chelsea Financial Services, to select two global equity growth products for comparison: the GAM Star Disruptive Growth Fund and the Guinness Global Innovators Fund.

Against this background, FSA asked Darius McDermott, managing director, Chelsea Financial Services, to select two global equity growth products for comparison: the GAM Star Disruptive Growth Fund and the Guinness Global Innovators Fund.

Source: FE Fundinfo, Morningstar. Data in US dollars

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