Fund of the Month March 2020

The latest fund tip, hand-picked by our Investment Guidance team.

Article updated: 2 March 2020 12:00pm Author: Lucinda Gregory

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Our Fund of the Month for March is Smith & Williamson Artificial Intelligence.

While the market may currently be experiencing a higher level of volatility March’s fund of the month looks to the future and the theme of Artificial Intelligence is one for long term.

Reasons to buy:

  • Artificial Intelligence (AI) will be a persistent, growing theme in the global economy, felt across all sectors and regions. This fund offers the chance to capitalise on this theme.
  • The fund provides global exposure which differs from the US bias of traditional technology funds.
  • The fund has outperformed its sector since launch.
  • The fund offers investors exposure to the AI theme at an affordable rate for an actively managed fund with an OCF of 0.55%.

Things to be wary of

  • The fund will likely underperform in falling markets due to its strong growth style bias.
  • From time to time the fund may invest in initial public offerings (IPOs) which frequently are smaller companies therefore carrying a higher level of risk.
  • The fund does not have a yield so isn't suitable for income seeking investors

About the fund

Artificial Intelligence (AI) is a persistent, growing theme in the global economy. Launched in 2017 Smith & Williamson Artificial Intelligence fund enables investors to gain exposure to companies best placed to harness the transformational opportunities presented by this theme.

The managers Chris Ford and Tim Day aim to provide long term investment growth by investing in companies who derive most or all of their revenues or growth from AI.

The fund itself has AI embedded as part of the selection process enhancing the efficiency with which the managers can identify investible companies for the 30-40 stock portfolio. The fund managers then filter further assessing companies for their breadth and depth of involvement in AI. This process includes estimating the company’s revenue reliant upon AI and the impact of AI to the company’s overall growth rate.

The portfolio is diversified in terms of industry sector, geographies and company size (with a minimum market cap of $250m).

Portfolio Positioning and Performance

The influence of AI is not limited to one sector of the economy or to one global region. This fact results in a portfolio markedly different from that of traditional Global technology funds which are predominantly focussed on US technology names.

The diverse nature of this fund allows exposure to both cyclical (industrials and financials) and defensive (healthcare and consumer areas) sectors allowing positive performance in fluctuating economic cycles. It is also not constrained by geographical regions with just over 50% in the United States and the remaining 50% worldwide including Asia Pacific, UK and Europe.

The fund is growth orientated so investors should be aware it will likely underperform in falling markets. However the breadth of the theme should see it display more resilience than a focussed thematic fund (e.g. robotics) in market downturns.

The Smith & Williamson AI fund has displayed strong performance since launch in 2017 outperforming its peer gr over this period and producing a return of over 65%. Investors must of course remember past performance is not an indication of future performance.

This fund would suit an adventurous investor as a satellite to a core portfolio.

Risk rating: H10


All information given including prices, yields and our opinion is correct at the time of publication. Our opinions on investments can change at any time and for our latest view please go to www.share.com. To understand how our Investment research team arrive at their views please read our Investment Research Policy.

Lucinda Gregory portrait photo
Lucinda Gregory

Investment Research & Guidance Manager

Lucinda has significant experience working in the fund management industry having previously worked at J.P. Morgan. She currently manages our team of analysts who are leading the company’s sell-side proposition and are responsible for our range of preferred lists.