Tech stocks, a key part of JUNO’s investment portfolio, have taken a hit lately. Are we still invested in tech and is JUNO still a growth investor? Founder + CEO Mike Taylor explains.
It has been a tough couple of months for investors, with the tech-heavy Nasdaq index having one of its worst months since 2008 as global markets react to rising interest rates, inflation, and the war in Ukraine.
Our tech weighting drove JUNO’s impressive performance, in particular the Growth Fund, to the end of 2021. Since then, our investment style has been hit harder than others as the bear market correction has mostly been in technology stocks, which are usually the growth part of the market.
We have now reduced our weighting in non-profitable tech. With the benefit of hindsight, we should have reduced tech at the end of last year but certain unpredictable events, like the war in the Ukraine, caused the market to sell off.
Technology and innovation remain one of the most exciting opportunities for investors, however caution is warranted until signs appear that this tech rout is over. By temporarily reducing our exposure to tech, JUNO funds’ volatility should be lower than it was in the first three months of 2022. There will be a time to aggressively get back into tech, but we first want to see inflation start coming down and interest rates stabilise.
Our active management strategy means our investment team regularly reviews our investments, focusing on selecting high-quality, growth companies. We also look for a competitive advantage and a strong management team.
We remain growth investors. However, JUNO investors will see how we have pivoted in the last couple of months to have a greater breadth of growth companies across sectors we previously hadn’t focused on, such as healthcare (through UnitedHealth Group, for example). We have identified companies that are likely to perform well should the US go into recession. These companies have very defensive earnings and some have a long track record of solid performance.
There are still many positive attributes to investing in tech companies, with lots of SaaS (software as a service/subscription) companies having predictable recurring revenue. The world needs tech and innovation so their time in the sun will come again.
Information correct as at May 2022. Pie Funds Management Limited is the issuer and manager of the JUNO KiwiSaver Scheme. Click here for our Product Disclosure Statement. Any advice is given by Pie Funds Management Limited, and is general only. It relates only to the specific financial products mentioned and does not account for personal circumstances or financial goals. Please see a financial adviser for tailored advice. You may have to pay product or other fees if you act on any advice. As manager of the Scheme we receive monthly fees that are determined by your balance and whether you are 13 years or over. We will benefit financially if you invest in our products. We manage any conflicts of interest via an internal compliance framework designed to ensure we meet our duties to you. For information about the advice we can provide, our duties and complaint process and how disputes can be resolved, visit www.junofunds.co.nz. All content is correct at time of publication date, unless otherwise indicated. Past performance is not a reliable indicator of future returns. Returns can be negative as well as positive and returns over different periods may vary. Please let us know if you would like a hard copy of this disclosure information.