Platinum International Technology aims to provide capital growth over the long?term by investing in information technology, telecommunications and electronics companies from around the world, including providers of hardware, software, services and content. The Fund primarily invests in technology and telecom securities listed on securities markets around the world. The Fund will also invest in providers of computing, networking and telecommunications equipment, software, semi? conductors and related capital equipment providers, IT services, as well as network operators, content providers and ‘Internet’ based businesses.
The Fund was down less than 1% in the past quarter whereas the technology benchmark declined over 3%. Key contributors to performance include Universal Music Group (+22%), Black Knight (+19%), Soitec (+13%), Bookings (+14%) and the Fund’s short portfolio (+18%). Key detractors from performance include DeNA (-20%), Samsung SDI (-23%), Infineon (-17%), ASML (-15%) and Microchip (-12%).
There are three key drivers that explain the difference between the Fund’s performance and the benchmark.
• Microsoft, Apple and Nvidia make up ~50% of the benchmark weighting whereas the Fund’s exposure to mega cap tech is generally below 20% (currently at ~15%).
• The Fund generally seeks to be 80 – 90% net invested. This means that in strong and narrow markets (for example 1H23), the Fund’s performance lags – though the inverse can apply when markets are weak – for example in 1H22.
• USD holdings make up ~40% of the Fund and this is significantly lower than the benchmark at ~89%. As such, the Fund will typically underperform when the USD appreciates vs other key currencies (EUR and JPY) at a faster rate vs the AUD. The converse is true when the USD depreciates.
What is Platinum International Technology Platinum International Technology is an Managed Funds investment product that is benchmarked against Developed -World Index and sits inside the Foreign Equity - Long Short Index. Think of a benchmark as a standard where investment performance can be measured. Typically, market indices like the ASX200 and market-segment stock indexes are used for this purpose. The Platinum International Technology has Assets Under Management of 169.35 M with a management fee of 1.35%, a performance fee of 0 and a buy/sell spread fee of 0.2%.
How has the investment product performed recently?
The recent investment performance of the investment product shows that the Platinum International Technology has returned 2.01% in the last month. The previous three years have returned 4.22% annualised and 15.3% each year since inception, which is when the Platinum International Technology first started.
How is risk measured in this investment product?
There are many ways that the risk of an investment product can be measured, and each measurement provides a different insight into the risk present. They can be used on their own or together to perform a risk assessment before investing, but when comparing investments, it is common to compare like for like risk measurements to determine which investment holds the most risk. Since Platinum International Technology first started, the Sharpe ratio is 0.44 with an annualised volatility of 15.3%. The maximum drawdown of the investment product in the last 12 months is -4.39% and -33.03% since inception. The maximum drawdown is defined as the high-to-low decline of an investment during a particular time period.
What is the relative performance of the investment product?
Relative performance is what an asset achieves over a period of time compared to similar investments or its peers. Relative return is a measure of the asset's performance compared to the return to the other investment. The Platinum International Technology has a 12-month excess return when compared to the Foreign Equity - Long Short Index of 10.9% and 0.46% since inception.
Does the investment product produce Alpha over its Peers?
Alpha is an investing term used to measure an investment's outperformance relative to a market benchmark or peer investment. Alpha describes the excess return generated when compared to peer investment. Platinum International Technology has produced Alpha over the Foreign Equity - Long Short Index of 0.59% in the last 12 months and -0.07% since inception.
What are similar investment products?
For a full list of investment products in the Foreign Equity - Long Short Index category, you can click here for the Peer Investment Report.
What level of diversification will Platinum International Technology provide?
Platinum International Technology has a correlation coefficient of 0.85 and a beta of 1.41 when compared to the Foreign Equity - Long Short Index. Correlation measures how similarly two investments move in relation to one another. This establishes a 'correlation coefficient', which has a value between -1.0 and +1.0. A 100% correlation between two investments means that the correlation coefficient is +1. Beta in investments measures how much the price moves relative to the broader market over a period of time. If the investment moves more than the broader market, it has a beta above 1.0. If it moves less than the broader market, then the beta is less than 1.0. Investments with a high beta tend to carry more risk but have the potential to deliver higher returns.
How do I compare the investment product with its peers?
For a full quantitative report on Platinum International Technology and its peer investments, you can click here for the Peer Investment Report.
How do I compare the Platinum International Technology with the Developed -World Index?
For a full quantitative report on Platinum International Technology compared to the Developed -World Index, you can click here.
Can I sort and compare the Platinum International Technology to do my own analysis?
To sort and compare the Platinum International Technology financial metrics, please refer to the table above.
Has the Platinum International Technology been independently verified by SMSF Mate?
This investment product is in the process of being independently verified by SMSF Mate. Once we have verified the investment product, you will be able to find more information here.
How can I invest in Platinum International Technology?
How do I get in contact with the Platinum International Technology?
Comments from SMSF Mates
SMSF Mate does not receive commissions or kickbacks from the Platinum International Technology. All data and commentary for this fund is provided free of charge for our readers general information.
Performance Commentary - June 30, 2023 The Fund (C Class) returned 4.2% for the quarter.1
Since the start of the year, the US Federal Reserve (Fed) has raised the federal funds rate on three occasions for a cumulative 75 basis points to 5.25%, representing a slowing in its more aggressive pace adopted in 2022. A more cautious approach was justified to allow the Fed to assess the impact on the economy of previous rate rises, as monetary policy tends to work with lagging eff ects.
Moreover, the collapse of three regional banks in the US and Credit Suisse in Europe during the space of a few days in March 2023 most likely made the Fed board members more cautious about the potential negative repercussions on the global financial system.
As the world avoided another global financial crisis and with bank depositors’ confidence restored, US markets were largely flat during April, only to face another hurdle with the looming deadline of the US debt ceiling legislation in early June.2 With the US Congress finally approving the higher debt limit on 3 June, the US stock markets rallied strongly in the last month of the quarter, with technology stocks particularly supported by the emerging and new powerful thematic of artificial intelligence (AI).
In this context, technology stocks in aggregate finished the quarter strongly. The Nasdaq-100 Technology Sector Index returned 13% for the quarter, while the PHLX Semiconductor Index returned 14%. Even high-growth/ unprofitable technology companies recovered strongly, with the ARK Innovation ETF up 9% during the quarter.
The Fund’s positive performance for the quarter can be attributed to strong moves in US communication services, semiconductors and semiconductor equipment names in the US and Asia. European holdings lagged on a weaker economy, particularly Germany, which after two consecutive quarters of negative GDP growth is now technically in a recession. Similarly, China’s struggle to recover post-COVID lockdowns negatively impacted our holdings which are more exposed to consumer demand.
Performance Commentary - March 31, 2023 The Fund (C Class) returned 13.2% for the quarter.1
Technology was one of the strongest-performing sectors in the quarter. At the macro level, the strong performance is likely explained by expectations that the US Federal Reserve (Fed) may stop increasing interest rates sooner than initially thought due to slowing wage growth, easing inflation and banks tightening their lending standards post the Silicon Valley Bank collapse. At a stock level, companies that reported during the first quarter were broadly in line with expectations or better than feared.
Semiconductors were the standout performers during the quarter (+28%)2 as commentary from various management teams suggested that the first half of 2023 is likely to mark the bottom of the downturn and conditions could progressively improve throughout the rest of the year. The basket of unprofitable tech companies also benefited from lower interest rate expectations, rallying 15% in the quarter.3
Artificial intelligence (AI) was the “hot” theme during the quarter, after Microsoft drew attention to the capabilities and potential of ChatGPT. Microsoft (held in the Fund) and Nvidia were up 20% and 90%, respectively.4
The Fund’s long positions performed well due to our relatively high exposure to semiconductors, with key contributors including Microchip Technology (+19%), Taiwan Semiconductor Manufacturing (+19%) and Micron Technology (+21%). Power semiconductor Infineon Technologies (+33%) was also a strong performer in this category, the company reported its first-quarter results in February and preannounced strong second-quarter results in March. Profit results continue to be stronger than expected, as the auto and industrials end-markets remain resilient.5 Meta Platforms (+76%) was our top individual stock contributor. The narrative shifted after the company announced job cuts, there was evidence that Reels is getting traction and the market priced in the increasing likelihood that competitor TikTok may be banned in the US. Booking Holdings (+32%) delivered betterthan-expected revenue growth on the back of strong prices paid for hotel rooms sold.
Our short positions on individual stocks, index hedges and cash were the main detractors from performance. On the long side, JD.com (-22%) underperformed after reporting weaker-than-expected fourth-quarter results.
Performance Commentary - December 31, 2022 The Fund (C Class) returned 5.0% for the quarter.
During the quarter, the US Federal Reserve (Fed) raised the Fed Funds rate twice for a cumulative lift of 125 basis points to a level of 4.5%, as Chairman Powell continued to stress the importance of preventing inflation from becoming entrenched in the economy. As previously mentioned, the Fed considers its current course of action necessary to restore price stability, and its renewed determination may eventually tilt the US economy into a recession. Many investors have started speculating that such an aggressive monetary policy in a relatively short period of time has already impacted consumer and business confidence, and the Fed will need to reverse course sooner than planned.
Time will tell. In the meantime, investors have continued to try and second-guess the Fed’s next move, by interpreting each economic data release (consumer price indices, jobless claims, hourly earnings, etc.) in the hope of the long-awaited “pivot” on the direction of interest rates. Realistically, though, it’s a futile exercise as long as inflation shows no clear signs of permanently returning to more acceptable levels, as Mr Powell explained last quarter. Until then, as the old saying goes, don’t fight the Fed! In this context, technology stocks in aggregate finished the quarter largely flat, with investors re-assessing valuations and revising down growth prospects in light of the austere monetary policies implemented by the Fed and other major central banks.
The Nasdaq-100 Technology Sector Index returned 0.5% for the quarter. The narrower PHLX Semiconductor Sector Index returned 10%, suggesting that investors are perhaps trying to look through the negative news flow and positioning for a 2023 recovery. Once again, high-growth/unprofitable technology companies won the wooden spoon for performance: the ARK Innovation ETF fell 17% during the quarter and returned a cumulative -67% for the year.
Performance Commentary - September 30, 2022 The Fund (C Class) returned -5.9% for the quarter.
The Fund’s performance was disappointing, and largely reflected negative contributions from our Asian holdings (Chinese internet names and semiconductor companies in South Korea and Taiwan). A weaker Korean won, which depreciated by 5% against the Australian dollar (AUD), also detracted from performance. Conversely, the 7% decline of the AUD against the US dollar contributed positively to performance, with the Fund holding a 42% exposure to US names. The September quarter was a tale of two stories for technology stocks.
From the end of June until mid-August, investors were eagerly bidding the market higher (Nasdaq 100 Index +18%) as expectations grew that a modest economic slowdown and lower infl ationary pressures in the US would convince the Federal Reserve (Fed) to moderate or even reverse its tightening monetary policy stance. Unfortunately, investors’ expectations turned out to be too optimistic as infl ation remained stubbornly elevated throughout the quarter, and Fed Chairman Jerome Powell made it clear during a speech at the Jackson Hole Economic Symposium on 26 August that he was serious about his tasks. He stated that, “While higher interest rates, slower growth, and softer labor market conditions will bring down infl ation, they will also bring some pain to households and businesses. These are the unfortunate costs of reducing infl ation. But a failure to restore price stability would mean far greater pain.” He also stressed that, “Restoring price stability will likely require maintaining a restrictive policy stance for some time. The historical record cautions strongly against prematurely loosening policy.” Chairman Powell fi nished his speech strongly with, “We will keep at it until we are confi dent the job is done.” Investors did not like the more hawkish tone and the Nasdaq 100 consequently reversed its earlier climb.
Performance Commentary - June 30, 2022 The Fund (C Class) returned -8.0% for the quarter and -18.8% for the year. A relatively low exposure to the US market, high cash position, positive contributions from shorts, and a recovery in some of our Chinese internet holdings, assisted the Fund’s performance during what was a very weak quarter for markets, particularly technology stocks. The 8% decline in the Australian dollar vs. the US dollar also provided a positive contribution to performance.
Markets continued their bearish trend established at the beginning of the year, largely driven by the repercussions of the war in Ukraine, including the higher cost of energy and food, as well as disruptions to supply chains. Concerned about rampant infl ation, most central banks around the world have signalled more restrictive monetary policies, trying to contain what is no longer considered a transitory phenomenon. During the quarter, the US Federal Reserve (Fed) raised the Fed Funds rate on two occasions by a cumulative 125 basis points to 1.75%, negatively impacting asset valuations.
The recent trajectory of US leading economic indicator indices³ is also turning down, pointing to sluggish growth in the near term and possibly a recession later in the year, as the Fed continues its aggressive monetary tightening and reducing liquidity in the fi nancial system. In this context, technology stocks suffered another downdraft as investors reassessed valuations and prospects in light of the more diffi cult environment. The Nasdaq-100 Technology Sector Index returned -25% for the quarter, accelerating the decline from the previous quarter. The more cyclical PHLX Semiconductor Sector Index fell 25% over the quarter as investors started factoring in a more severe slowdown in demand for smartphones, PCs and consumer electronics after the strong demand experienced during the last two years.
Performance Commentary - March 31, 2022 The Fund (C Class) returned -13.7% for the quarter and -6.3% for the year.¹ After a stellar performance in 2021, technology stocks started 2022 on a more sombre note. The Nasdaq-100 Technology Sector Index returned -13% for the quarter, with weakness spread across all sub-sectors of the technology space. The more cyclical PHLX Semiconductor Sector Index was also down -13% for the quarter, as investors started worrying about a potential slowdown in economic growth. Software stocks suffered as well, as investors realised the risks of owning extremely highly valued names just as the US Federal Reserve (Fed) started tightening monetary policy to fi ght rampant infl nation.
The S&P North America Technology Software Index returned -14% for the quarter.² High-growth but unprofi table technology companies were down again during the quarter, with the Morgan Stanley Unprofi table Tech basket down -24%³ and the ARK Innovation ETF down -30%. The Fund was not immune from the turmoil. Investor sentiment turned negative during the fi rst week of January, once it became clear the Fed would move more decisively towards raising interest rates from current ultra-low levels. This accelerated investors’ switch away from growth into value stocks.
Performance Commentary - June 30, 2021 The Fund (C Class) returned 6.1% for the quarter and 29.2% for the year.1
Technology stocks performed strongly during the quarter, as investor sentiment in the US continued to improve, supported by improving economic data. US first-quarter gross domestic product (GDP) grew 6.4% quarter-on-quarter (qoq) on an annualised basis, consumer confidence rose strongly (albeit it remains below pre-COVID levels) and the unemployment rate was 5.9% in June, well down from its peak of 14.8% in April 2020.2
An increasingly large portion of the population in some developed countries has now been vaccinated, which has started to have a positive effect on economic activity. Most importantly though, the robust earnings season was a key driver behind the strong performance. Earnings reported for companies in the S&P 500 Index were well above estimates. FactSet calculated that reported earnings per share (eps) grew 52% in the March quarter, which was more than double the estimated earnings growth rate of 24% originally predicted by analysts at the beginning of the quarter.
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