The first half of 2023 saw a return to outperformance for the LF Blue Whale Growth Fund, following a particularly volatile year in 2022. The fund delivered performance of +15% (I Acc Class1) versus the IA Global2 sector average of +6.4% from the start of the year to 30 June 2023 – giving outperformance of +8.6%. Please note that past performance is not a guide to future performance.
The themes delivering performance for the fund were varied, from investments in AI beneficiaries (Nvidia) and the requirement for silicon sovereignty (ASML and Lam Research), to the evergreen theme of digital transformation (Microsoft and Adobe) and finally net inflation beneficiaries (Mastercard and Visa).
The quick success of AI platforms such as ChatGPT saw a huge uptick in the price of Nvidia in particular – a company in which we have held strong conviction for more than 2 years. Despite a plethora of naysayers in the market, we remained invested and even added to our position at deflated prices in 2022. The stock was up nearly 200% in the first half of 2023 and stands well above its previous peak of November 2021.
Whilst 2023 has been benign for selected technology businesses, other sectors have experienced their fair share of disappointment – most notably banks. Consequently, our investment in Charles Schwab has been one of the main detractors from performance in the year so far. Worries over solvency of US banks – particularly smaller, regional lenders – led to a sector-wide nosedive in March this year. However, we view Charles Schwab as a net beneficiary of subsequent expected further consolidation of the US banking sector and see it as a key investment to benefit from higher interest rates as it delivers a healthy return on its cash deposits.
Sartorius was another detractor from performance as customers ran their stocks down, following a period of overstocking due to supply uncertainty. However, once this destocking process is complete, we believe that Sartorius' sales should rebound strongly as the long-term drivers of the bioprocessing market remain healthy.
Looking forward in 2023, we remain of the view we hold a portfolio of high-quality companies whose strong fundamentals, and importance in an ever technologically advancing world, will continue to deliver outperformance for our investors.
1LF Blue Whale Growth I class Acc shares, net of fees priced at midday UK time, source: Bloomberg. 2IA Global sector average, source: FE Fundinfo. Performance data for period 01/01/23 to 30/06/23.
This communication is issued by Blue Whale Capital LLP which is authorised and regulated by the Financial Conduct Authority. Your capital is at risk. If you cannot afford the potential risk of a substantial loss, you should not invest. Equity investment should be viewed as a long-term investment. Past performance is not a guide to future performance. The value of investments may fall as well as rise and you may not get back the amount of your original investment. Prospective investors should study the Fund’s Prospectus, KIID and application form which together provide a complete list of risk factors. Blue Whale does not give investment advice. If you are unsure if the Fund is suitable for you, you should contact a financial adviser. Views we express on companies do not constitute Investment Recommendations and must not be viewed as such.
