Global equity markets declined in September as they were affected by concerns about inflation, ongoing supply chain disruption in a number of industry sectors and relatively hawkish comments from central banks such as the US Federal Reserve and Bank of England.
For the month, the MSCI World index produced a performance of -2.1% in GBP terms (-4.1% in USD). Regionally, Emerging Markets and particularly Latin America had a difficult month while in developed markets Japan was the standout performer with a local currency return of 4.5% (MSCI Japan index).
Source of all index data: MSCI as at 30.09.2021.
Performance vs sector/benchmark
The Fund produced a performance of -0.6% in September (source: Morningstar – GBP B Acc share class).
The Fund is not managed against a benchmark or specific sector index.
Past performance is not a guide to future performance. Total return, NAV to NAV basis, net of charges, assumes net income reinvested.
Positive and negative contributors
Positive contributors: Upstart Holdings, Netflix, Hitachi
Negative contributors: Alphabet, Ocado, Globant
Significant portfolio changes - buy/sells
Purchases in September included iFLYTEK, a leader in artificially intelligent speech recognition. The company’s Jarvisen translator enables accurate communication in 60 languages, powered by iFLYTEK's speech recognition, machine translation and speech synthesis technology. The translator responds to speech in less than 0.5 seconds.
We exited Hangzhou Hikvision; the stock has been a strong performer for the Fund since we purchased it but having been close to all-time highs in late-July it has struggled to make much headway in recent weeks.
We are pleased that despite a volatile market backdrop, the Fund proved largely resilient in September. Since inception in 2017, we have sought to deliver attractive thematic growth characteristics but without the high level of cyclicality that would be expected in much narrower themes such as robotics or industrial automation.
September was a challenging month for equities but for 2021 to date the returns from developed world equities remain comfortably ahead of government bonds. However, it is undeniable that the ‘easy’ part of the economic recovery is now behind us, and winter could see renewed challenges for policymakers and healthcare systems if infection rates pick up significantly. Soaring wholesale natural gas prices, if sustained, also pose a clear inflationary risk, which could begin to challenge the Fed’s narrative that recent price rises are ‘transitory’.
For AI as a theme, we continue to see a positive outlook – not least because we are finding that AI is being adopted by more and more sectors and industries, often with highly beneficial results. For example, recent research by the UK’s Met Office and DeepMind has shown that AI can significantly improve the accuracy of short-term weather forecasts – something that is likely to be vital if we are to mitigate the worst effects of extreme weather events. Those ‘extreme events’ are, unfortunately, likely to become much more common as the effects of climate change begin to play out. The good news is that AI-based approaches based on deep generative modelling comfortably outperform other short-term or ‘nowcasting’ techniques.
Source: Financial Times
, DeepMind and UK’s Met Office use AI to improve weather forecasts, 29 September 2021.