Five great technical revolutions have defined the progress of mankind… The Stone Age…The Bronze Age…The Iron Age…The Industrial Revolution…The Information Revolution. Now Robotics and Artificial Intelligence will become the sixth revolution to take mankind forward. Perhaps this era would be bettered named the Age of Magic.
We may not understand how Derren Brown appears to be able to levitate and walk on water, but we do know that it is achieved by misinformation and trickery and so we can rest easy. This is not the case with the advances in technology, such as medicine, robotics, nano and artificial intelligence sciences. As these become increasingly more complex, they are rapidly becoming more akin to magic for the bulk of the population. Technology is developing faster than education can instruct. Those that can keep up, the whizz kids of today such as Zuckerberg and the like, will become the controlling wizards of tomorrow.
Twelve months ago I wrote an article saying that technology funds invested in companies immersed in the Information Revolution should still be a good source for capital growth. Most of these funds carried Google, Apple, Microsoft, FaceBook, Cisco, Alibaba and Amazon in their portfolios, all the well known companies from this era. The concern was that these have massively high valuations and there is always the possibility of an imminent correction around the corner. They are also mainly dollar denominated, and any movement in the relationship between the dollar and sterling produced instant change for sterling based investors. Nevertheless these funds have still produced great returns.
Polar Capital Technology up 53% in the last twelve months….Scottish Mortgage Trust 45%
Henderson Global Technology 40%….L&G Global Technology 36%…AXA Framlington Global Technology 36%.
I have been struggling to find those companies and funds that are immersed in the “magic” technologies of the future. It turns out however, that many of these businesses are getting their development and expansion money by giving up equity to the likes of FaceBook, Amazon and Microsoft. So by default I am already invested in the “magic” via the technology funds I already hold. Maybe this new equity ownership alone will be sufficient to fight off the argument of over evaluation and bubbles in these older established businesses. If there is any truth in that, then maybe the technology funds above will not run out of steam and will continue to deliver the goods.
In the meantime it appears that Polar Capital is launching a unit trust that is going to hit the sweet spot. It is going to be called Polar Capital Automation and Artificial Intelligence Fund and its aim is to hold forty to fifty businesses all directly working in Derren Brown`s world of magic. That is one for me to hold!