Handelsbanken Global Digital (A10 NOK)

Fund performance was marginally positive in the quarter. Although the equity markets in the US and Europe showed small movements overall during the quarter, the period was eventful with significant fluctuations. Factors that affected the market included the drama related to the US presidential election in the autumn, interest rate cuts and increased concerns about a recession. The market has also begun to question the returns on some investments in generative AI. At the same time, the expansion of infrastructure related to data centers is continuing, which benefits companies with this type of exposure. The holding in Vertiv, with exposure to the cooling of data centers, was added during the quarter and has since then performed strongly. Axon has also posted strength, driven by the company’s AI product “Draft One”, which is already seeing high demand. Both Dynatrace and Zoom Video reported stronger than expected results and have rebounded after a period of weak returns and contributed to fund returns in the period. Alphabet, which has posted strength for some time, has recently come under pressure due to the market’s concern about increased regulations and greater competition for Google’s search engine from AI-generated searches. We agree with the concerns to some extent and have lowered the exposure during the quarter. ASML also posted weak performance and the company’s guidance in conjunction with its quarterly report was weaker than expected for the remainder of the year. The holdings in Docusign and Pagerduty were sold during the period.

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 those that can demonstrate benefits and profitability within their own AI strategies will succeed.