Navigate the future of tech investing with Fidelity
Hi, mooers! ![]()
In the 2023 Fund Investment Strategy Conference Series, we partnered with Fidelity International to explore the emerging trends in technology investment and the potential for generative AI in different sectors. Did you catch the live webinar? Did it spark any investment ideas for you?
If you missed the live webinar, don't worry! We have compiled the essential highlights for you. Let's recap the experts' sharing and explore diverse opportunities in tech investing together! ![]()
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What highlights can we gain from Fidelity？
1. A small group of seven tech stocks have generated the bulk of the S&P 500’s returns this year. This is creating huge valuation anomalies.
2. While we are still constructive on tech sector fundamentals and selected business models, the uncertain macro backdrop such as higher cost of capital could prove to be headwinds for some sub-sectors.
3. Valuations of most mega-caps have elevated due to strong inflow. However, mature and saturated growth opportunities could be inherent risks in the global macro environment.
4. While artificial intelligence (AI) has strong potential in the long run, not many businesses have successfully monetized it which is one of the risk factors we are monitoring.
5. We are finding opportunities in areas that are underappreciated by the market such as data management software companies and customer service companies.
6. We see attractive opportunities in European software companies that have strong fundamentals, and a global presence and are trading at lower multiples versus US peers.
7. Other interesting themes we are looking at include design and operational software companies exposed to digitization, companies that are benefitting from stronger pricing power such as companies offering streaming services and food delivery, companies with M&A opportunities within software, and video gaming companies that have shown resilience in uncertain environments.
During the live webinar, we got so many great questions from our mooers. We couldn't answer all of them then, but now Fidelity International has returned with answers to your questions! Let's go over their responses together!
Does this fund focus on ESG?
The fund invests at least 50% of its assets in securities of companies with favorable environmental, social, and governance (ESG) characteristics. As of 31 Oct 2023, 91.3% of the Fund’s assets are currently rated BBB by MSCI.
@撒花
What’s the breakdown of geographical focus?
*Cash refers to any residual cash exposure that is not invested in shares or via derivatives
Data as of 31 October 2023
Do we look in terms of global or some particular area or countries?
The Fund invests in companies globally that develop or will develop products, processes, or services providing or benefiting from technological advances or improvements. Within the fund, opportunities are evaluated at a stock level and the portfolio manager looks for long-term winners and best ideas irrespective of where the company is based.
We have witnessed significant outperformance from a select group of large-cap technology stocks, such as Apple and Nvidia, influencing the equity returns in the US markets. With speculation surrounding a potential recession in 2024, do you believe these mega-cap tech stocks serve as a reliable hedge against a potential recession risk next year?
Fundamentals of most mega-cap companies remain strong with solid growth, high margins, and strong free cash flows. Having said that, investors tend to view mega-caps as a safe haven, so these stocks have seen strong inflows even in the current uncertain environment. As a result, valuations are elevated.
The market also tends to underappreciate the inherent risk in mega-caps. While everyone uses the goods and services of these companies, this also means the growth opportunity has become more mature and saturated. Additionally, these companies are more exposed to the global macroeconomic environment compared to smaller-sized companies that have more company-specific growth drivers. Moreover, as companies get bigger, the regulatory scrutiny intensifies.
Given the fund focuses on technology. What recent technological advancements or industry trends do you believe will have a significant impact on the performance of technology stock in the near future. and how might investors strategically position themselves to capitalize on these trends
We are currently closely looking at the digitization of the manufacturing industry. We like design and operational software companies exposed to this segment. Other areas where software adoption is still underpenetrated include the industrial and energy sectors where end-to-end design software can play a big role.
We are also looking at companies that are benefitting from stronger pricing power in a higher cost-of-capital environment. One example is a video streaming company that has become stronger as its competitors have become more profit-focused, cutting content-related costs. Another example is the food delivery industry. In the software space, we are looking at M&A opportunities within tech firms. For example, a global leader in IT and networking has recently acquired a software company, and the big tech companies are continuing to look for growth through acquisitions.
Finally, another interesting area is video gaming companies that have shown resilience in an uncertain macro environment. These companies are one of the cheapest forms of entertainment and have solid, defensive business models.
Anything we should specifically look out for when investing in technology-related companies?
We are still fairly constructive on tech sector fundamentals and companies’ business models. However, it is important to recognize that we are living in a different environment from the one seen over the last 10-15 years. In the past, low-interest rates have allowed tech companies and investors to focus on innovation and future growth potential. These companies could sacrifice near-term profits and cash flows mainly because access to capital markets was easy and funding costs low. But in a higher cost of capital environment, companies will have to be more disciplined. Encouragingly, many tech companies have already undertaken a lot of cost-cutting activity and have become more focused on profitability.
IT services companies, for example, have seen a slowing demand environment with sales cycles becoming more elongated. With the focus on profitability, budgets have become tighter. This phenomenon is particularly prominent in the technology, media, and telecommunications (TMT) segment.
Artificial intelligence (AI) has been a very exciting topic this year. Fundamentally, we believe AI is an interesting technology and has strong potential from a long-term perspective. Many companies are investing in building AI infrastructure and, as a result, we are seeing a surge in demand in areas such as graphics processing units (GPUs) and AI networking.
In our view, AI adoption may turn out to be slower than expected. People often compare generative AI with the iPhone movement and while the latter was an innovative consumer product where adoption was very quick, the former is a business application - which will need to be considered alongside regulation, compliance, security, and data governance. This is why, despite all the buzz around AI, we have not seen many businesses that have been able to successfully monetize AI. So, there could be a digestion period with this technology and that’s one of the risk factors that we are monitoring.
Lastly, we invite you to revisit the entire live webinar once again and discover more investment inspiration for 2024! Tap here to view the replay right now!>>
We'd love to hear your thoughts on the live webinar! What did you learn? How do you think the technology sector will progress in the coming year? Would you consider investing in technology-related funds to enhance your investment portfolio?
We have prepared 30 points for mooers of all relevant and meaningful comments over 30 words! ![]()
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This presentation is strictly for informational and educational purposes and is not a recommendation or endorsement of any particular investment or investment strategy. See this link for more information.
This publication is prepared on a general basis for information only. It does not have regard to the specific investment objectives, financial situation, and particular needs of any specific person who may receive it. You should seek advice from a financial adviser. Past performance and any forecasts on the economy, stock or bond market, or economic trends are not necessarily indicative of future performance. Views expressed are subject to change, and cannot be construed as advice or recommendation. References to specific securities (if any) are included for the purposes of illustration only. This publication has not been reviewed by the Monetary Authority of Singapore.
FIL Investment Management (Singapore) Limited (Co. Reg. No.: 199006300E) Fidelity, Fidelity International, and the Fidelity International Logo and F Symbol are trademarks of FIL Limited CA-2023-1596106-(G)
FIL Investment Management (Singapore) Limited (Co. Reg. No.: 199006300E) Fidelity, Fidelity International, and the Fidelity International Logo and F Symbol are trademarks of FIL Limited CA-2023-1596106-(G)
Disclaimer: Moomoo Technologies Inc. is providing this content for information and educational use only.
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mr_cashcow : My key takeaway from the moomoo technology investing live webinar is to also keep an open eye out for other lesser know but emerging tech sectors and not just sololy focusing on the popular ones
Jaspher : yes... learning and trying to understand the fundamentals
Thy GoD : Main takeaways would be to monitor the evolving landscape of technology and constantly adapt how we perceive it's growth and potential as new technology gets introduced and we find opportunities in such new technologies. (block chain tech and ai tech would've made us alot if we invested in it's early stages.)
Regarding fidelity's tech funds, from my personal fund analysis, while $Fidelity Funds-Global Technology Fund (LU1823568750.MF)$ has a lower expected return than the $Invesco QQQ Trust (QQQ.US)$ etf, its risk/variance is lower, so I chose it over QQQ due to higher risk adjusted returns and I wouldn't need to bother w currency conversion or dividends.
Currently it's up arnd 12% which is damn good already.
I also love Fidelity's managed portfolios that moomoo offers, I don't know how to place it's ticker here but I've calculated it's returns to be on-par with syfe, with an added bonus of no portfolio management fees.
小trader : The Fidelity webinar highlighted the dominance of a few tech stocks in the S&P 500, leading to valuation anomalies. While optimistic about tech fundamentals, potential headwinds from an uncertain macro backdrop were acknowledged. The emphasis on underappreciated sectors, like data management and customer service companies, and opportunities in European software companies resonated. The nuanced approach to risks, particularly in monetizing AI, added depth. The exploration of themes such as pricing power, M&A prospects, and the resilience of video gaming companies provided actionable insights. Looking ahead, the discussion prompts reflection on the evolving tech landscape, with consideration for technology-related funds for a well-rounded investment strategy.
102362254 : I will consider investing in technology-related funds to improve my investment portfolio. Technology is one of the most dynamic and innovative sectors in the global economy, and it offers many opportunities for growth and diversification.
10161187 : From the webinar, I learned about the intricate dynamics impacting tech stocks' valuations, the importance of underappreciated sectors, and the potential hurdles in monetizing AI. Considering the evolving tech landscape and diverse opportunities discussed, I foresee continued growth in the technology sector, albeit with challenges. The potential in emerging tech segments, such as digitization in manufacturing and underpenetrated software areas, presents a promising outlook. Personally, I find the depth and variety in tech-related investment avenues appealing. Considering the sector's innovation and adaptability, investing in technology-related funds could be a strategic move to augment and diversify my investment portfolio for the future.
ZnWC : I'm looking for funds investment with artificial intelligence and gaming themes. Fidelity seems to fit the criteria. My next question is the return and how long do I need to hold the funds in order to get the return.
My concern is volatility risk. Hence I will need to analyse the opportunity cost against stocks and ETFs. I also wonder how Fed rate pivoting will impact funds which may happen in Q2.