Some are born as Tech funds; others are not and are falsely considered as such. The Subscription economy strategy falls in the latter category and has been repeatedly mistaken by investors to behave like one. Simply put, this analogy is a statistical misconception, that has resulted through extreme market conditions. A useful way to look at how companies move in relation to one other is through the lens of correlations, that have the ability to statistically explain performances within a portfolio – and have historically reflected the relationship between sectors, between stocks and consequently between indices and portfolios. Exogenous events, particularly those unexpected by markets – the unknown unknowns - can push statistics into extreme territory. This was the case of the year 2020.

Highlights

  • It turns out Technology has proved very resilient during the Covid crisis and simply put we think this is the reason why the fund behaved similarly to a tech fund in 2020.
  • The “illusion” where all outperformers during the pandemic were Technology companies and oppositely all the underperformers since the Vaccine breakthrough were Technology companies seems to be behind us. However, we are yet to witness these changes in the way investors perceive portfolios.
  • Technology is a big enabler of subscriptions and plays a big role in adapting an offering to ever-changing consumer demand. That being said the strategy is no way Technology oriented and does not intend to be. The pandemic driven rotations have led to this false conclusion: this is simply the ‘long term’ dressing up in ‘short term’ clothes.
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