Fund in Focus: Sygnia 4th Industrial Revolution Global Equity Fund

Fund manager insights:

Technology stocks are no longer a niche area of investment: Now they dominate exchanges as multinationals that lead the world. IT stocks now form the largest sector of the S&P 500 with an approximate weight of 25%. 

Excluding tech stocks from portfolios is becoming an increasingly risky decision and Sygnia feels that this situation is set to continue in 2018 and beyond, says Anthonie Lombard, portfolio analyst at Sygnia Asset Management.

“The massive scope of these [Fourth Industrial Revolution] breakthroughs is set to disrupt almost every sphere of life as we know it and could affect your ability to earn an income for the rest of your life or your human capital.

“Investing in this fund would therefore act as a natural hedge should this become a reality,” he says. 

The fund is designed for a long-term investor with a high risk appetite. By its very nature, investing in technology stocks rather than in a broad market index is risky. 

However, says Lombard, the 4th Industrial Global Equity Fund reduces the risk by investing in more than 280 stocks. 

It is suited to investors willing to take higher risks and those wanting to participate in the rapid growth of New Economy industries.

The fund is constructed by combining the 16 Kensho New Economy Indices using an in-house proprietary blending methodology to achieve an optimal exposure mix.  

Kensho is a large analytics firm funded by GV (the venture capital arm in the Google group), Goldman Sachs and CNBC. 

“We would therefore not select the individual stocks that we think should be included in a New Economy index – we leave this up to Kensho, who is better suited to identifying these stocks with big data and artificial intelligence.” 

This approach takes the emotional bias out of the investment decisions made by human analysts, who are also incapable of processing all available information. 

Lombard says that investing in technology is particularly hard because the companies are “cool” and develop ingenious products and services that transform our daily lives.

This makes it difficult to make unbiased investment decisions.

Why finweek would consider adding it:

The Sygnia 4th Industrial Global Equity Fund is the first product of its kind available to South African retail investors. It offers exposure to global companies at the forefront of the Fourth Industrial Revolution, which sees new technologies merging the physical, digital and biological worlds at an exponential pace.

The New Economy indices include drones, cyber security, robotics, space, wearables, 3D printing, autonomous vehicles, smart buildings, nanotechnology, cleantech, virtual reality, genetic engineering and clean energy.

The fund has substantially outperformed its benchmark since inception.

This article originally appeared in the 29 March edition of finweek. Buy and download the magazine here or subscribe to our newsletter here.

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