Looking Beyond AI in Global Technology with Anthony Ginsberg

GinsGlobal has been around 25 years. We run about 22 different index fund strategies.

We originated as a mutual fund player doing index funds, passive investing globally, because we found out that the rest of the world was finally catching on to the American revolution of indexation. So we offer both index funds and ETS. We’ve actually been very happy to work with Han over the last almost eight years.

Investing in technology can be a way to really get broad exposure. Unfortunately, what’s happened in recent times is that there’s been a very, very narrow gain in the tech space. And unfortunately, there are a lot of people to be significantly overweight and in a very narrow sense in just a handful of stocks.

We actually believe it’s really as a global conversion story that more and more technologies are converging across multiple themes, such as from AI across to social media, digital entertainment, and that actually it’s a far more broader play than just artificial intelligence. And also it’s a broader play beyond just the United States. It’s really a global story and you actually get exposure, not just the top handful of names, but actually even as the second tier names, frankly, aren’t at the same level of valuation.

So there’s a great opportunity and actually probably a buying opportunity when you look broadly, that beyond just the famous names out there, it hasn’t actually infiltrated into the mid caps and the small cap level. So we’re actually a bit more positive broad based that globally it’s been ignored. And I think there are ways to play the tech base in a much broader sense than historically.

Just like the Premier League, we found it very difficult to time the markets, particularly when you look at these various sub themes from cybersecurity to cloud to AI, robotics. It’s very, very tricky. There are a couple of players within that that have obviously outperformed.

But truth be told, in any given year, often the ones who are top of the pops in a certain year, the following year, such as blockchain, has had an incredible run last year, but the prior years may not have been so good. So we’ve just decided equal weighting where you rebalance every six months using some sort of an index related approach. It’s just a lot easier to actually get this broad based diversification, particularly globally.

So what we’ve approached is to have the top types of leaders in each of these sub themes, whether it’s robotics or it’s AI or cyber or cloud, to try and get an international flavour, but across top thematic leaders. And essentially that will broaden out your base and you’ll be just beyond a certain country like the United States. It’s a way of actually really expanding the tech based opportunity.

I mean, I know AI is all the rage in the media, but what’s not typically covered is how AI is actually infiltrating other areas of the tech space. So for us, there’s conversions across things like social media, gaming, digital entertainment, and even frankly cloud. They all have a direct impact on what is going on in the ponderance of AI spend.

So we’re actually very positive specifically on cloud. And then in areas such as social media and digital entertainment, they’re also benefiting from increasingly the usage of AI. So the last thing I’d say is we expect more mergers and acquisitions in the broader tech space.

And that was held back under the previous administration in the US. So actually under the current administration is a lot more freewheeling being done. And currently the valuations aren’t as expensive as what I’ll say as many predict.

So we actually see quite a lot of valuation benefits currently. There’s been a bit of a negative effect in the last couple of months. The media have sort of knocked a couple of the holdings.

So we’re actually more positive that it’s a good time for the tech industry as you get these tailwinds coming through with US economic growth, lower inflation, and also interest rates generally across the board globally probably coming down. So we’re reasonably hopeful. Yeah, it’s interesting, Tom.

Some of the companies will actually have a couple of different lines of business. But if their main category, if you sort it by revenue, and if their main category, for instance, may be cloud, as well as being some other spaces, they’ll actually be categorised in our ETF where their revenues are largest, even though they may be across the board in three or four different sub-themes. It’s generally done by market cap.

So we look at the largest players. And we’ve got just over a dozen or thereabouts players that you have in each of these categories. So it does cover the gambit.

But most of them will be the largest players. The large caps, interestingly enough, don’t necessarily dominate. A lot of folks, when they look at tech, they just think about the larger players.

Sometimes the most interesting part of tech at the moment might be the broader play in the mid-cap and small-cap space as well. Yeah, I think the reason for being somewhat positive on markets is that there’s a fiscal stimulus underway in the US, meaning that there’s going to be huge tax cuts currently coming through. The average American is going to essentially have about a $1,000 or more tax cut over the next year.

And also there’s a big, big infrastructure play where the capital expenditures can be written off. So the Americans on their own are creating a huge fiscal stimulus, which will also probably reduce interest rates over time, which is typically quite good for growth stocks in general. So we are positive on that.

And just lastly, the weaker US dollar and the stronger euro will also probably help the more focused American operators. So a weaker dollar is not all bad.