Bifm attributed its performance to the Magnificent Seven
Despite facing challenges during the third quarter of 2023, the Botswana Insurance Fund Management (Bifm) Global Sustainable Growth Fund demonstrated resilience and concluded the year with a robust performance in the fourth quarter, the Q4 factsheet showed.
This was particularly noteworthy as inflationary pressures gradually eased, contributing to heightened investor optimism.
During the fourth quarter, Bifm reported favorable stock selection, notably within the industrial and information technology sectors. The Fund delivered a return of 10.68% over the quarter, surpassing the benchmark MSCI All Country World Index (ACWI) by 1.95%, which achieved a return of 8.73%. Over the 12-month period ending June 2023, the Fund exhibited strong performance, yielding a return of 29.19%, outperforming the benchmark by 0.85%.
Bifm attributed its performance over the year to a robust first half, driven by the outstanding performance of the “Magnificent Seven” stocks (Apple, Alphabet, Amazon, Meta, Microsoft, Nvidia, and Tesla), largely fueled by advancements in artificial intelligence (AI).
“However, strong earnings provided a further catalyst for strong performance as the year progressed,” Bifm said adding that market performance has remained concentrated in the technology sector. “While all sectors performed positively within the quarter, the technology sector remained dominant followed by retail and industrials.”
Bifm noted that the Fund’s decision to maintain a zero-weight allocation to the energy sector contributed positively to its performance. However, allocations to consumer staples, communication services, and materials had a negative impact on performance during the quarter. The Fund’s zero-weight allocation to real estate also weighed on returns.
BIFM foresees that artificial intelligence (AI) will persist as a prominent theme within the technology sector moving forward. “However, investors still must unfold the full potential of the technology and its potential in driving new revenue streams and productivity gains. As the area is not yet well understood, it will continue to be an area of emphasis.”
Investors are expressing concerns that the current surge in AI-fueled technology stocks might resemble a bubble, reminiscent of the dot-com bubble burst in 2001.
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