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Turnkey Tech Investing: April 2020 Market Brief

By Bill Studebaker, CIO & President, ROBO Global

 

Phew, what a couple of months! We are living through a period in time that many of us will never—but certainly wish we could—forget. Personally, I am emotionally and physically exhausted. I could not have guessed that when our office doors closed many weeks ago, my work would become 24/7, including a whirlwind combination of deciphering the constantly changing markets, babysitting, and homeschooling, all while trying to achieve some sense of normalcy.

While I won’t even attempt to address the challenges of parenting during quarantine, the markets have at least been behaving logically, if not joyfully. April brought a lot of excitement around markets rebasing, but the end of last week was a sober reminder of how easy it is to get swept up in the frenzy of these volatile times—and how quickly things can snap back to reality. 

The Fed, Central Banks, and global governments have provided a seemingly endless amount of support to help pad assets and put money in consumers’ pockets. The old adage says that ‘the market goes down like an elevator and up like an escalator.’ This time around, however, it felt more like ‘down like a stone, up like a rocket.’ The ROBO portfolio advanced +15.4%, while HTEC rallied +17.1%, both far outpacing the +10.7% gain in ACWI for the month.

Moving forward, both indices are well-positioned. As we transition to an asset-lite economy, investments in areas such as data and algorithms should prove more capital-efficient than investments in heavy areas like property, plants, and equipment. Additionally, the majority of the carefully selected companies in the ROBO indices have very strong balance sheets, and they are not exposed to many of the key pressure points in the economy, such as leisure, transportation, energy, restaurants, gaming, and more. As a result, we expect to see many of our index members gaining share coming out of this crisis—especially in the areas of artificial intelligence, automation, enterprise software, and healthcare technologies.

As we all look for some light at the end of the tunnel, the anticipated growth across robotics, automation, and AI (RAAI) may be the answer to the COVID blues. For now, it’s back to juggling the 24/7 workday of quarantine.

 

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