Whether cybersecurity, artificial intelligence, or clean energy: for about a year now, the Megatrends portfolio has bundled five future-oriented themes with great economic potential. Which trend is currently driving performance in particular, and what makes this portfolio special.
A market value of more than one trillion US dollars: only a handful of companies worldwide can boast such a high market capitalisation. Following a steep rise in its share price, Nvidia of the USA joined this select circle in mid-June. Nvidia produces processors that count as “critical infrastructure” for artificial intelligence. The “brain” of ChatGPT, for example – currently probably the most popular form of artificial intelligence – is made up, among other things, of over 20,000 Nvidia graphics processors.
About a year ago, on 14 July 2022, this development was not foreseeable in this form. Nvidia’s market capitalisation was around half its current value. “Artificial intelligence” drew attention here and there but did not yet dominate the headlines. At that point, quirion added its Megatrends portfolio to its offering. From the very beginning, artificial intelligence was one of the investment themes – and, via corresponding thematic ETFs, Nvidia was one of the portfolio’s constituents. This year, both have so far been among the performance drivers.
In a way, this development is typical. Megatrends are long-term movements of major economic and social significance, unfolding sometimes subtly and sometimes in surges. Exactly when the one happens and when the other cannot be predicted. Whether the “iPhone moment” – and thus the definitive breakthrough – has already arrived for artificial intelligence, for example, will only be possible to judge in hindsight.
This is especially true of the question of which companies will be among the winners of the trends. Jensen Huang, CEO of Nvidia, speaks quite openly about how the company he co-founded, Nvidia, has narrowly escaped bankruptcy on several occasions. The more targeted your investment, the greater the risk.
Targeted – yet diversified
Thematic investments are popular among investors as a way to set their own emphases within a portfolio. But how do you invest in a way that appropriately accounts for the risks? And which theme is truly promising for the future? For the Megatrends portfolio, our investment strategists explored questions like these. They examined various investment themes and selected five for the Megatrends portfolio. In doing so, they considered how strongly each individual theme is carried by megatrends and how much the themes influence one another. That they reinforce each other is, in the view of our investment strategists, an important signal of their relevance and future viability.
With thematic investments too, diversification across numerous securities reduces risk. To diversify a portfolio, ETFs are an effective and inexpensive instrument. In the Megatrends portfolio, our investment strategists have deliberately combined various equity ETFs and continuously monitor the product selection as well as the weighting of the themes. The portfolio currently holds positions in over 650 stocks.
Core and thematic investments
Within quirion’s product range, the Megatrends portfolio is an additional offering. It follows a different strategic approach than the global ETF portfolio. The global portfolio, as a core investment, is geared towards the broadest possible diversification. That is the only way to truly optimise the balance between return opportunities and risk. The Megatrends portfolio, however, is suited as an admixture. It is aimed at investors who want to set their own accents within their portfolio.
This applies beyond that – and especially – to the other thematic investments that quirion offers. There are now 13 additional portfolios available, through which investors can invest even more specifically in themes such as artificial intelligence, digital infrastructure, or health and innovation. Whether this form of investing is an option depends on each investor’s personal risk-return profile. quirion checks this during the application process – and then makes prospective customers a proposal that fits their profile exactly.
