“Never before in history has innovation offered promise of so much to so many in so short a time”: Bill Gates
The 1st known wave of innovation started in 1785 with the Industrial revolution. Over 200 years later, we are in beginning of the 6th wave. Themes dominating the current innovation cycle: Artificial Intelligence, Robots & Drones and more recently Block chain, Metaverse etc. Span of Innovation cycle is reducing over the years, General Purpose Technology is now created in 4 years; Also the next era of Innovation can be completely/ different from what has already happened.
Innovative companies are rewarded significantly over broad-based/defensive companies hence identifying future innovators can help generate high returns. A study by Wharton School has shown that 1$ invested in January 1962 into high R&D innovation companies has grown by 45X vs the broader market (Wilshire 5000) by 7X only. Investment in Low R&D innovators has grown by 12X.
Data shows half of the top tech companies fail to remain in top after a decade; Can current FAANG+ make to next decade? Having a structured mechanism of shortlisting multi-managers using global best practices helps in ensuring we have exposure to the relevant players.
India’s rank in global innovation index is 48 . This highlights the importance of diversifying globally to benefit from leaders in this space. How can our portfolios benefit from this space?
DSP Global Innovation Fund:
DSP Mutual Fund are introducing a fund that is unique and will benefit every investor to participate in global innovators and disruptors. It is also unique because of its construct and a never tried before sales strategy. DSP Global Innovation Fund is India’s first new fund offer with a special focus on SIPs.
Themes of tomorrow
- It’s not an IT fund, but invests in dominators, innovators and disruptors across businesses globally
- Its diversified with multiple themes beyond software and internet, like semiconductors, bio technology, gene mapping, fintech, internet & media
- It has exposure to cutting edge next-gen themes like Artificial Intelligence, Machine Learning, Robotics, Cloud Infrastructure, Digital Transformation & more
- In addition it has sectors which are at the forefront of R&D spending like Semi-conductor, ICT Hardware & Electronic Equipment, Pharma & Bio-Tech, Automobiles, Software, Aerospace & Defence.
- It invests in 5 underlying funds managed by the best and amongst the largest asset managers of the world
- It’s a blend of active & passive strategy with suitable allocation to large, mid and small cap companies
- Has a low correlation with the Indian equity market, hence is a good diversification strategy
Key features of product
- Portfolio Split – iShare Semiconductor ETF -20%, Morgan Stanley US Insight fund -25%, BGF World Tech fund -25%, Nikko AM ARKK Innovation Fund – 20%, iShares NASDAQ 100 UTICS ETF – 10%
- Allocation across themes like: Semi-Conductors – 27%, Software – 22%, Internet & Interactive media – 14%, Bio Technology & Health care – 9%, Ecommerce -7%, Fintech – 6% ,Mobility – 5 %
Others – 10% .
- Active & Passive allocation (70:30)
- Overall market capitalisation (Large Cap- 65.9 %, Mid Cap- 21.4%, Small cap- 5.7%)
- Well diversified across geographies
Why SIP:
- Potential to witness extremely volatility in short to medium term hence best to do SIP
- In back testing model for 15 years, SIP outperformed by 6% vis-a-vis lumpsum
Mutual fund investments are subject to market risks read all documents carefully before Investing!
Pramada Finserv 