Portfolio manager comments — Q2 2024
Fund performance was positive during the quarter and the fund rose 6% in SEK. The positive trend in the equity market continued during Q2, driven by the digitalization and AI theme. Those companies that can already show increased revenues and profitability linked to AI have benefited in particular. The US central bank signaled that inflation is under control and the market is currently pricing in rates cuts for the end of 2024.
Hardware and semiconductor companies, such as Nvidia, TSMC, Apple, Broadcom and Arista, were among the fund’s positive contributors to returns. All of these companies benefit from the development of the infrastructure that supports AI. Holdings such as Alphabet also continue to see high demand for their cloud services, which enable Generative AI in their customers’ IT infrastructure.
During the quarter the fund participated in the IPO of Raspberry Pi, which develops and sells smaller computers for domestic use and integration in industrial equipment. Holdings in Model N and Powerschool received acquisition bids during the quarter and were divested. We sold holdings in Adobe, Salesforce and several other holdings.
The performance for the software company sector has been negative and can be explained by the competition with other AI investments within customers’ IT budgets, together with a weaker economy with higher interest rates and longer sales cycles. We believe that vertical software companies that offer services within a specific area will have better prospects to succeed in the current environment. One such example is Tyler Technologies, which has customers within the public sector and thereby has the potential to fare well.
As in previous quarters, companies within the digitalization theme will continue to be affected by the rapid growth underway within AI. Companies within different sectors are affected to varying degrees, although we expect