Old joke: When your neighbour loses his job, it is a recession. When you lose yours, it is a depression. Spy has been raging to anyone who will listen, for months, that the inflation beast is coming and gobbling up all our spending power. The view has been largely academic so far, showing up in esoteric categories such as lumber charts or heating oil futures or in luxury properties Spy could not afford to buy anyway. This week, however, the beast comes much closer to home. Coffee futures have hit an all-time high, doubling in price in the last twelve months. Spy’s craft beer and espresso habits are well known to long time readers. Sadly, those daily cups of joe are now going to cost us all a whole heap more, adding a touch more pandemic misery to our woes.
If travelling to Macau or Singapore for a wager at the casino tables is unavailable or the stock market itself is not enough of a casino for you these days, Spy has a shiny new ETF to satisfy that urge to have a gamble. This week the iBET Sports Betting & Gaming ETF was launched on the Nasdaq. The new fund takes on long established competitor, BETZ, which is a passive vehicle; in contrast, iBET is an actively managed fund. To take a wager on this thematic is not exactly cheap: the fund is charging 0.79% per annum. The global gambling industry has ballooned in the last few decades and is now worth about $516bn annually, according to consultancy Research and Markets.
For people of a certain age group, e-Sports (computer game tournaments) remain a mystery – something that takes place beyond their realm and ken. The scale of the business and the number of participants usually astonishes when the facts are laid bare. The annual revenue of global e-sports has exceeded a billion dollars for the first time this year, according to Statista. Spy was not surprised to hear, therefore, that Franklin Templeton has recently participated in a sponsorship deal with One Esports in Singapore, sponsoring their Wild Rift SEA Championship 2021. The challenge of reaching generation Z and millennials in such a fragmented media landscape is pushing brands, including asset managers, to think of new avenues. Unlike many activities tied to pandemic lockdowns, such as jumping on your shiny new Peloton bike, e-sports gaming is not a flash in the pan and is almost certainly here to stay.
Are the days of the portfolio manager heading to the sunset? Bloomberg reports that Schroders’ CEO, Peter Harrison told the ALFI London Conference that: “There is much less a battle for traditional portfolio managers these days.” He explained: “They’ll [the portfolio managers] never thank me for saying it, but their value has declined relatively because there are so many other parts that need addressing.” Harrison was prepared to go out on a limb and say, “We are at peak mutual fund. The mutual fund has been fantastic thing for our industry, simplified our lives, but it is 80-year-old technology.” Harrison, like many other asset management CEOs, sees investment in technology insatiably gobbling up corporate resources as the company embraces entirely new ways of providing investment solutions to a new generation. Spy finds it hard to disagree.
It started with “analyst” and then we got a few “directors”. Soon enough, we got some “heads of” and, this week, we finally arrive at “chief”. Spy is talking about sustainability, of course. A mere five years ago the roles in ESG or sustainability tended to be junior, specialist or periphery and now they are board-level behemoths with budgets, influence and massive heft. Spy contemplated this trend as Ninety-One announced this week it had promoted Nazmeera Moola to chief sustainability officer. In this newly created role, Moola will oversee “investment integration, advocacy, corporate transition to net zero and developing and implementing efforts to mobilise dedicated funding for an inclusive net zero transition.” Nothing peripheral about this role – and full marks too for the statement’s impressive enumeration of buzz words.
What do Rickenbacker Motor Co., Peerless Motor Car Co., Moon Motor Car Co., Kissel Motor Co., Duryea Motor Wagon Co. all have in common? They were car company start-ups that flourished at the beginning of the 20th century as the nascent automobile industry boomed. These ill-fated and ultimately doomed companies soon sank into obscurity and bankruptcy, despite their investors and CEOs’ best efforts. Spy was contemplating this little bit of motoring history as Lucid, an EV maker with few sales, was valued this week at more than $80bn, and Rivian, with no sales at more than $100bn. History does not repeat but it rhymes…
The market did not exactly love Alibaba’s results much yesterday as the shares got walloped 11% in New York. It ably illustrates how unforgiving the market can be when sentiment turns. Almost unsung in the Chinese giant’s quarterly report, the company announced that annual active consumers of Alibaba’s ecosystem around the world reached 1.24 billion for the twelve months ended in September. This was an increase of 62 million users from the twelve months ended in June. When a billion users are simply not enough…
Spy’s quote of the week comes from John Malone, of Liberty Media. “There’s no question that the equity markets right now are so interested in growth, above all other criteria, and this is, like, the bubble in the late ’90s. It’s all about growth. This is a land rush right now. Profitability to be determined later.” Spy does wonder if the lesson learned by investors in early 2000, that not every company made it from hype to sustainable entity, with many just footnotes in investment history, will need to be learned all over again by a new generation of investors.
Spy’s photographers in Singapore have spotted a new campaign out by J.P. Morgan Asset Management. The perennial favourite, multi asset income, is back in lights.
Until next time…
