Here's A Different Kind Of Tech Strategy

Here's A Different Kind Of Tech Strategy

over 3 years ago2 mins

Mentioned in story

When it comes to stocks, UK investment firm Blue Whale Capital favors Adobe over Apple – and the not-so-flash player’s strategy has helped one of its easily accessible funds make quite a splash recently… 🐳

What does this mean?

The firm’s flagship Blue Whale Growth Fund is heavily focused on tech stocks. Shares in the sector account for more than 60% of the value of its portfolio, which consists of stakes in just 25 (mainly US-based) “beautiful companies”.

But as Blue Whale’s founder pointed out in an interview with financial data giant Bloomberg this week, not all tech stocks are created equal. In an increasingly uncertain world, the fund is focused on companies with reliably recurring revenues that should be able to grow regardless of any wider economic malaise 🤢

Software company Adobe is seen as a prime example. Demand for its digital content creation tools is sky-high – and even if a decline in online ads leads to subscribers’ usage of Adobe’s software dropping, they’ll still pay the same.

Blue Whale’s boss is less complimentary about the business models of Apple, Uber, and Zoom, however – as well as chipmakers and other electronic hardware companies. Intense competition means an expensive battle for customers, while Zoom in particular may face an uphill battle to charge for services that Microsoft andGoogle can afford to provide for free…

Zoom’s previously rapid share-price rise has stalled in recent weeks
Zoom’s previously rapid share-price rise has stalled in recent weeks

Why should I care?

The proof of the pudding is in the eating – and Blue Whale’s no small fry. Since its launch three years ago, the firm’s flagship fund has delivered investors 19% annualized returns; in other words, a day-one Jonah’s $1,000 would have been regurgitated as over $1,650 today. And while most global stock markets have barely grown in 2020, the Blue Whale Growth Fund is up more than 16%.

The fund’s 98th-percentile performance means it’s one of the best around
The fund’s 98th-percentile performance means it’s one of the best around

What’s more, while Blue Whale shares a cofounder with British investment platform Hargreaves Lansdown, its flagship portfolio is readily investable through most major fund supermarkets, with around two thirds of its investors individuals. While no substitute for the diversification of a fund tracking an entire stock market, Finimizers looking to add a little reliable tech spice to their pots may want to take note… 🤓

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