Digital Economy

Global Technology strategy: Positive reports from our companies emphasised the strengths of the business models exposed to technology

  • 08 September 2020
  • 3min read

Key points

  • The Global Technology strategy performed positively in August
  • Positive contributions from our Software as a Service (SaaS) companies
  • Notable contributions from Salesforce.com, Zoom and Ocado

What’s happening?

During August, the MSCI World index gained 4.6%. The technology sector outperformed with the MSCI World Information Technology index, up 8.4%1. [All index returns provided in GBP]

Investor sentiment remains constructive as earnings and economic data continued to be better than feared. However, companies have continued to paint to paint a somewhat cautious tone for the remainder of the year, cognisant that despite the encouraging signs seen in business activity at present, COVID-19 continues to present uncertainties.

Portfolio positioning and performance

The Global Technology strategy performed positively in August, as several of the themes we invest into continued to perform well. As such, we have seen notable contributions from Salesforce.com, the enterprise software-as-a-service (SaaS) provider of a broad suite of customer relationship management tools which reported excellent results. Prior to this, markets were concerned that Salesforce would see an impact from customers having to cut their IT2 budgets because of the pandemic, but the company reported results well above expectations on revenue, billings and margins. Video communications platform Zoom also reported results that far exceeded expectations, and significantly raised guidance for the full year.

Ocado, British online grocery company who started to licence its market leading technology to peers around the world also continued to perform well, as investors increasingly recognise the step change in demand for online grocery shopping which should significantly modify the landscape for the overall industry.
Elsewhere, other notable performer included WorkDay, another SaaS business providing tools to Human Resources and Financials departments.
During the month we continued to use market volatility to add to existing holdings. We sold Pure Storage, the supplier of solid state (or All Flash Array) storage solutions as we felt that the company could be vulnerable in changes in IT3 spending due to the current Covid19 crisis. We also reduced our holding in Apple for diversification purposes after the strong run the stock has had recently.

Outlook

We are encouraged by the early signs of a recovery in the global economy, largely supported by Central Banks who continue to step up with stimulus measures and should continue to support equity markets.
We are pleased to see that companies within the portfolio have reported mostly better than expected results, showing the strengths of the business models exposed to technology.

We remain aware that there will likely be further after-shocks felt around the globe as a result of the virus and that there might also be secondary waves of outbreak. We continue to believe that the opportunities driven by the long-term themes within the portfolio remain intact, and could even play out stronger, once the current turmoil is over.

No assurance can be given that the Global Technology Strategy will be successful. Investors can lose some or all of their capital invested. The Global Technology strategy is subject to risks including; Equity; Smaller companies; Currency; Industry sector or region; Changing technology; Emerging markets; Liquidity.

  • Bloomberg as of 31/08/20
  • Information Technology
  • Information Technology

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