What is the fund?

What is the investment strategy behind the Asia Pacific fund?

The Sanlam Asia Pacific Artificial Intelligence Fund provides investors with direct revenue exposure to companies in the Asia Pacific region that have the potential to harness the power of AI.


By investing in the shares of these leading businesses, we can create a portfolio that is diversified in three ways:
 

Industry sector

Although much of the hardware and software that enables AI is developed by technology firms, the breadth of AI as a theme means that we can find investment opportunities in ‘defensive’ areas of the market (such as the healthcare and consumer sectors) and the more economically sensitive areas (such as industrials and financials). As we aren’t focusing on just one narrow area of the market (such as automation or robotics), we can build a portfolio that offers attractive growth characteristics but also resilience (compared to other narrowly focused ‘thematic’ funds) when markets are volatile.

Country exposure

Investment is spread across a range of key economies in the Asia (including Japan) region. As with the main Fund, there is no formal benchmark so the managers don’t have to invest in a particular country if there are no compelling investment opportunities there. Moreover, this is not a China fund; at launch, China and Hong Kong together are expected to account for less than 40% of the Fund’s geographical exposure.[1]

 

Company size

The Fund has the flexibility to invest in start-up or highly entrepreneurial firms with significant growth potential as well as more established businesses with strong market positions and competitive scale advantages. As with the global fund, all positions are scaled for liquidity, meaning that small-cap holdings will necessarily be smaller positions than large-cap companies that are broadly exposed to the theme.

 


[1] Source: Sanlam Investments, 30 September 2021.

Why invest in the fund?

  • Exposure to a rapidly evolving theme in a key geographic region that has emerged as one of the leading lights in AI, where innovation is rapid and AI is already embedded in everyday life

  • Managed by the same growth equities team that devised and runs the $1.2bn+ Sanlam Global Artificial Intelligence Fund, with all positions sizes scaled for liquidity. As with the sister fund it will be run as if it were $1bn+ already

  • Proven, proprietary AI embedded in the investment process (Orbit platform)

  • High-conviction actively managed portfolio (35-40 holdings) with every position held on merit but diversified by sector, country and size

  • Huge range of industry-level opportunities due to the breadth and speed of the artificial intelligence theme and the disruption resulting from it

The fund was one of the pioneer AI funds within Europe when it launched in 2017 and provides exposure to companies benefiting from the growth or deployment of artificial intelligence. All positions within the fund are held on merit - we employ a high-conviction approach and don’t use a benchmark. This ensures there is ongoing competition for capital in the fund.

Our approach works because we are genuinely agnostic about where we invest – that is, our investment universe does not begin and end in Silicon Valley. Our AI platform is a constant source of new ideas as it can scour company documents in a range of different languages (alphabetic and logographic), searching for the elements of AI that we have defined.

What stocks does the fund hold? 

Within the fund, we hold a mix of established companies that are engaged with or deploying AI, as well as newer companies that are using or developing AI applications. We aren’t solely focused on the enabling technologies of AI – this is important because non-tech areas like healthcare, financials and the consumer and industrial sectors are all beginning to harness the power of AI.

We think it’s crucially important that investors understand that AI will permeate almost all areas of the global economy, and that is reflected in the composition of the fund.

Environmental, Social and Governance

Active and ongoing engagement with companies rather than outright exclusion. We believe that over the long term, integration of robust ESG policies make good business sense.

  • We have always been mindful of issues which may impact the sustainability of returns over the medium to long term
  • ESG issues are considered when they may have a material impact on investment risk or return
We partner with MSCI, a global ESG and corporate governance provider, and ESG is fully integrated as follows:
  • All teams have access to the detailed ESG reports so include this risk analysis as part of their due diligence
  • Comparable company scores allow for best-in-class analysis at the sub-industry, sector and regional level
  • Quarterly investment committee meetings review ESG reports on each fund, looking at the overall score and challenging on the riskier or more controversial holdings.

 

Pure exposure to AI in Asia Pacific

Meet the Growth Equities Team

Chris Ford
Chris Ford
Head of Growth Equities
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Tim Day
Tim Day
Senior Fund Manager
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Giles Worthington
Giles Worthington
Senior Fund Manager
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Alex Keast, CFA
Alex Keast, CFA
Investment Analyst
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AI is the vector through which productivity is being injected into businesses

Chris Ford, Fund Manager

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Fund Risks

Past performance is not a guide to future performance. Do remember that the value of an investment and the income generated from them can fall as well as rise and is not guaranteed, therefore, you may not get back the amount originally invested and potentially risk total loss of capital. A table with five years’ performance is available in the fund factsheets.

The Fund invests mainly in Asia therefore investments will be vulnerable to sentiment in that market which may strongly affect the value of the Fund. Exchange rate fluctuations may cause the value of investments to go down as well as up.  Investing in companies based in emerging markets may involve additional risks due to greater political, economic, regulatory risks, among other factors.

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