Warning: members of the public are being contacted by people claiming to work for AXA Investment Managers UK Limited.  Find out more information and what to do by clicking here.

Equities

Digital Economy strategy - September 2021

  • 07 October 2021
  • 5min read

Weaker markets in September after seven consecutive months of positive returns, but underlying trends are intact

  • The ‘Decision’ theme contributed most to performance
  • Strong performance from dating Apps and Online Travel Agencies (OTAs)
  • We would be inclined to use share price weaknesses as an opportunity to invest

What’s happening?

After seven consecutive months of positive returns, global equity markets fell in September, with the MSCI All Country World index declining 4.1%1.  Central banks confirming that we are at the start of the next tightening cycle and persistent inflation concerns were the main driving factors of the market correction. In addition, in the US, the economy is grappling with a surge in the delta coronavirus variant and markets remained volatile in Asia after Evergrande, one of China's biggest real estate developer, defaulted on its interest rate payments.

Portfolio positioning and performance

During September, our exposure to the Decision theme contributed most to performance. We saw strong performance from dating App company Match Group and online travel agent Booking Holdings, as both names are benefitting from economies reopening.

Within the Delivery theme, we saw good performance from cybersecurity company Darktrace after reporting strong results with significant growth in customers and a robust product traction.

Within Data & Enablers, Salesforce, enterprise software-as-a-service (SaaS) provider of a broad suite of customer relationship management tools, performed strongly after upgrading its revenue and margin guidance for the next fiscal year.

We saw weaker performance from digital payment company Paypal despite fundamentals remaining solid and logistics real estate provider Goodman group as broader sector sentiment was less favorable over the month.

During September, we sold the remainder of the investment in Chinese food delivery, travel and lifestyle platform Meituan as regulatory uncertainties over matters such as drivers' social insurance costs continue to be an overhang.

Outlook

As we emerge from the Covid19 pandemic, we are aware that equity markets may continue to be volatile and this could be the case for a while until we get better insight with regards to the recovery of the global economy. We continue to believe that the opportunities driven by the long-term themes within the strategy remain intact and our focus on identifying well managed businesses, with proven operating models and large opportunities still to address is the right approach to investing in the long-term growth opportunities present within the Digital Economy.

Whilst many aspects of the Digital Economy delivered expansion during the Covid19 outbreak, we are cognisant that questions will be raised about the future likelihood of growth as the world returns to some level of normality.  We are aware that annualised growth rates might be challenging in the near term, and we have taken this into account within the strategy.  However, we believe that many of these investments are in companies that will continue to flourish over the coming years despite near term headwinds and so we look to use any weakness in share prices as an opportunity to add to our holdings.

The digital evolution is not an overnight coup, whilst some decisions had to be made in a hurried fashion last year in order to ensure that businesses could remain operational during an unexpected event there are also many opportunities that will develop over time as companies seek to put in place the systems and technology to enable business continuity if a similar event ever happens again.

The strategy remains well positioned to benefit from the trends associated with the digital economy theme, such as digital payments, cyber-security and e-commerce.

  • Source: Bloomberg as of 30/09/2021
Read the full article
Download article (258.72 KB)

Have our latest insights delivered straight to your inbox

SUBSCRIBE NOW
Subscribe to updates.

Related Articles

Equities

Clean Economy strategy - September 2021

  • 17 October 2021
  • 5min read
Equities

Robotech strategy - September 2021

  • 07 October 2021
  • 5min read
Equities

UK Multi-Cap strategy - August 2021

  • 05 October 2021
  • 5min read
Are you a financial advisor, institutional, or other professional investor?

This section is for professional investors only. You need to confirm that you have the required investment knowledge and experience to view this content. This includes understanding the risks associated with investment products, and any other required qualifications according to the rules of your jurisdiction.

    Not for retail distribution

    : This document is intended exclusively for Professional, Institutional, Qualified or Wholesale Clients / Investors only, as defined by applicable local laws and regulation. Circulation must be restricted accordingly.

    Past performance is not a guide to current or future performance, and any performance or return data displayed does not take into account commissions and costs incurred when issuing or redeeming units. The value of investments, and the income from them, can fall as well as rise and investors may not get back the amount originally invested. Exchange-rate fluctuations may also affect the value of their investment.  Due to this and the initial charge that is usually made, an investment is not usually suitable as a short term holding.

    This document is for informational purposes only and does not constitute investment research or financial analysis relating to transactions in financial instruments as per MIF Directive (2014/65/EU), nor does it constitute on the part of AXA Investment Managers or its affiliated companies an offer to buy or sell any investments, products or services, and should not be considered as solicitation or investment, legal or tax advice, a recommendation for an investment strategy or a personalized recommendation to buy or sell securities. The strategies discussed in this document may not be available in your jurisdiction.

    Due to its simplification, this document is partial and opinions, estimates and forecasts herein are subjective and subject to change without notice. There is no guarantee forecasts made will come to pass. Data, figures, declarations, analysis, predictions and other information in this document is provided based on our state of knowledge at the time of creation of this document. Whilst every care is taken, no representation or warranty (including liability towards third parties), express or implied, is made as to the accuracy, reliability or completeness of the information contained herein. Reliance upon information in this material is at the sole discretion of the recipient. This material does not contain sufficient information to support an investment decision.

    Please note that the management company reserves the right, at any time, to no longer market the product(s) mentioned in this communication in an European Union country by notification to its authority of supervision in accordance with European passport rules. In the event of dissatisfaction with the products or services, you have the right to make a complaint either with the marketer or directly with the management company (more information on our complaints policy available in English here). You also have the right to take legal or extra-judicial action at any time if you reside in one of the countries of the European Union. The European online dispute resolution platform allows you to enter a complaint form (by clicking here) and informs you, depending on your jurisdiction, about your means of redress (by clicking here).

    Risk Warning

    The value of investments, and the income from them, can fall as well as rise and investors may not get back the amount originally invested.