Synthetic intelligence shall be an funding theme that can proceed to develop in 2025 and past, in line with a tech fund supervisor that posted 80% positive aspects in 2024. The Hong Kong-listed trade traded fund Pando CMS Innovation ETF ‘s Chief Funding Officer Beck Lee mentioned the fund depends on proprietary analysis that mixes macroeconomic elements with firm fundamentals to make inventory picks. “On this ETF, we mix top-down and bottom-up analysis to assemble this portfolio,” Lee instructed CNBC Professional from Hong Kong. “The highest-down method helps us to establish themes lik e the affect of the [Federal Reserve’s rate decisions], and establish sectors like AI or cryptocurrency,” Lee added. “The underside-up method helps us to establish the shares with stable fundamentals.” 3056-HK 1Y line Lee instructed the fund’s technique is geared towards long-term positive aspects over short-term strikes, particularly in AI. The fund has held a stake in Nvidia since its inception in December 2022. See Pando CMS Innovation ETF holdings under. “AI is a long-term development. Not only one yr or two-year factor,” Lee defined. He pointed towards feedback from Nvidia CEO Jensen Huang who mentioned AI has advanced over a few years to grasp imaginative and prescient and textual content, and is ready to enter the bodily realm . The ETF manages a extremely concentrated portfolio of 17 shares together with Microsoft , chipmaker Taiwan Semi , Spotify , Apple , Amazon , Netflix , Nvidia and Tesla amongst others, which have made the fund one of many best-performing actively managed ETFs on the earth. The 17 shares, on common, returned 75% final yr on an unweighted foundation. The fund, which manages $10 million in property, invests largely in U.S.-listed corporations. Comparatively new to the trade but managing greater than $500 million in property, the fund’s administration agency Pando Finance was based in 2021 in Hong Kong. Its executives, nonetheless, have a few years of trade expertise, together with its chief government and founder Junfei Ren, who was beforehand an government on the German inventory trade Deutsche Boerse and ZhenFund, one in every of China’s largest enterprise capital funds. The agency additionally manages ETFs which might be targeted on corporations working in blockchain expertise. CIO Lee mentioned it leveraged its experience within the cryptocurrency sector to establish MicroStrategy and Coinbase as shares to carry within the CMS Progressive fund. Shares of MicroStrategy, which gained 358% in 2024, are broadly seen as a Bitcoin proxy on account of its leveraged holdings of the cryptocurrency. It is a high 10 holding within the Pando CMS Innovation ETF and contributed considerably to the fund’s general efficiency. Holdings Equally, Nvidia and Spotify had triple-digit returns in 2024 and are among the many high 10 shares within the fund. Lee mentioned he expects Nvidia to proceed to outperform owing to the structural change it is enabling within the international financial system by way of the widespread use of AI. Nonetheless, he cautioned that the corporate will battle to keep up its present gross revenue margins of about 75% sooner or later as opponents take market share. “I believe the excessive margin of Nvidia is difficult to keep up at 75%. I believe it is going to [fall] to excessive 60[%]. Perhaps not subsequent quarter, however perhaps subsequent yr.” Lee mentioned. “However I believe the margin will begin to fall.” Microsoft, one in every of Nvidia’s largest prospects, has already begun diversifying the AI processors it makes use of. Analysts say the corporate has contracted considerably cheaper AI chips from Broadcom , a California-headquartered chip designer. Microsoft is Pando ETF’s largest holding, with a 9.4% allocation, whereas Broadcom accounts for two.9% of the fund. The fund has held the AI chip inventory, in addition to the chip maker Taiwan Semiconductor, since its inception. Among the many fund efficiency’s detractors had been AMD and Adobe , which fell by 18% and 26%, respectively. Each shares accounted for lower than 2% of the fund by the tip of 2024.
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