Despite fears of a prolonged U.S./China trade war, escalating geopolitical tensions in the Middle East, and slowing global growth, global equity markets finished June with solid gains. The ROBO portfolio gained 10.3% for the month, easily outpacing a 6.5% gain for ACWI.
After a two-day meeting, Fed Chairman Jerome Powell addressed fears of how the continuing US/China trade war could hurt the US economy. Powell commented that the central bank was closely monitoring the situation and the Fed would “act as appropriate to sustain the expansion.” This perceived willingness to cut interest rates was positive for risk assets and drove equity indices higher.
The investment theme in 2019 has been “expect a tougher climb.” It’s a straightforward declaration, but the emphasis has always been on “the climb.” Recently, however, the “tougher” part has been getting the upper hand.
However, June’s results demonstrate that robotics and artificial intelligence (AI) are technologies that have the upper hand—and that are delivering the investment alpha investors are seeking in today’s volatile market environment. While we don’t have a crystal ball to predict tomorrow’s stock market moves, we do remain heavily convicted in our view that robotics and AI are powerful disruptors that are rapidly changing our lives and nearly every business model across the globe. As a result, we do not believe that the current economic cycle is at its end. For that reason, it is paramount that investors position themselves for this monumental investment opportunity and, most importantly, stay invested in what promises to be a journey that lasts for decades.
By Bill Studebaker, President & CIO, ROBO Global