Fundeye profiled Guinness Asset Management Global Innovators fund before the upbreak of Covid. Its manager, Dr Ian Mortimer has provided the latest quarterly update.
For the first quarter of 2021, the Guinness Global Innovators Fund produced a total return of 3.29 percent (in GBP) against the MSCI World Index net total return of 3.95 percent. The Fund therefore underperformed its benchmark by 0.66 percent over the quarter.
Equity markets generally rose across Q1, as the roll out of three efficacious COVID-19 vaccines across nations along with Biden and the Democrats' winning of both chambers of Congress made for enthusiasm about a recovery in the global economy in 2021 backed by further fiscal stimulus and the vaccination roll out. However, it was not entirely smooth sailing. US Treasuries sold off, sending yields higher on rising optimism and greater inflation expectations, negatively affecting the more interest-sensitive sectors including IT. Value came back into vogue as Banks benefitted from the steepening yield curve and Energy benefitted from a rising oil price. Overall, the markets were buoyed by increasingly optimistic growth expectations, both by companies and bodies including the IMF, governments continued their unprecedented fiscal policies including newly elected President Biden's proposed $2 trillion package, while central banks continued to hold rates low while assuring they will remain low for some time.
During the quarter, there were various drivers behind the fund's performance. The absence of any Energy or Bank stocks in the portfolio was a drag on performance from an asset allocation perspective. Stock selection from the fund's consumer discretionary exposure was also a drag. Conversely, while the IT sector was a laggard over the quarter, the semiconductor industry vastly outperformed its hardware and software counterparts, up 11.5 percent (MSCI World Semiconductor Index, USD) over the quarter. With generally bullish management commentary, industry supply constraints, and continued growth in capital expenditure from leading foundries, the fund's semiconductor exposure was the Fund's largest contributor to performance, primarily from the semiconductor equipment manufacturers, Applied Materials (55.percent), KLA Corp (28.0 percent), and LAM Research (26.3%), which ended the quarter as the fund's 3 best performers.
Over both the short and long-term, it is pleasing to see that the Fund's strategy remains well positioned across all periods versus its IA Global Equity sector peers. In particular, we are pleased to see the fund rank 4th out of 88 funds over the period since launch.
