AI: DATA WILL BE THE KEY THAT OPENS THE DOOR TO VALUE CREATION

Lifepartners et la finance durable

Interview with JACQUES-AURÉLIEN MARCIREAU, Manager of the Edmond de Rothschild Fund Big Data.

Boosted by the strong interest in artificial intelligence, on 30 May Nvidia joined the very select circle of giants with a market capitalisation of over $1,000 billion. The American graphics processor manufacturer, a major player in the AI revolution thanks to its supercomputers, joins Microsoft, Apple, Amazon, Alphabet and Saudi Aramco. It had gained 25% the previous week, after reporting better-than-expected results for the first three months of the year and a solid outlook for the current quarter. The markets also welcomed the announcements made by the company, which originally specialised in graphics cards for video games, at the Computex trade fair in Taiwan. Jensen Huang, founder and CEO, presented some particularly promising new products for the continued deployment of AI.

YOU HAVE HELD NVIDIA IN YOUR PORTFOLIO SINCE THE CREATION OF THE EDMOND DE ROTHSCHILD FUND BIG DATA IN AUGUST 2015. WASN’T THE COMPANY’S HIGH VALUATION A HINDRANCE TO THE MANAGEMENT TEAM, WHICH IS PARTICULARLY DISCIPLINED IN THIS AREA?

We have long been convinced of Nvidia’s potential to create value. We have recently reduced our positions but are still overweight the graphics processor manufacturer, which has been in the portfolio continuously since 2015 and is a historic contributor to performance.

The fund is ideally positioned to benefit from the artificial intelligence revolution. However, we should bear in mind that there is still a great deal of uncertainty about the size of the generative AI market, the competitive environment and the computing requirements, given the possible optimisation of algorithms.

We manage the fund pragmatically, but our valuation discipline remains strict. This approach has not changed and will not change. Fundamental analysis, the compass for our investments, is crucial.

WHAT IS YOUR VIEW ON ARTIFICIAL INTELLIGENCE?

One thing is certain: artificial intelligence has not finished surprising us. The increase in the precision of algorithms is fascinating, but the much-publicised ChatGPT reminds us above all that to train a model on such a large scale, you need access to data. Make no mistake about it: whoever controls the data remains the most powerful player in this value chain, especially as the number of competing algorithms increases.

Data users” – those non-technology companies with the most appropriate digital strategy for gaining a competitive advantage from the use of Big Data – are best positioned to succeed in the coming years. The winners of AI will therefore be to be found among the large companies that have a mass of proprietary data, such as banks, insurers, healthcare or logistics companies, which will invent new uses for these tools.

WHAT ARE THE SPECIFIC FEATURES OF EDMOND DE ROTHSCHILD FUND BIG DATA AND HOW HAS IT PERFORMED SINCE THE START OF THE YEAR?

In our view, the fund’s performance validates the relevance of its unique approach. To take advantage of the value-creation potential of data in all sectors of the economy, we have put in place a cross-functional methodology. The fund can therefore be positioned up to 49% in non-technology companies and seeks to maintain a balanced profile in terms of sectors, style and market capitalisations.

Edmond de Rothschild Fund Big Data posted a performance of +11.3% between 1 January and 30 May, compared with +8.9% for its benchmark index, the MSCI World (NR). Of course, the tech giants have contributed to value creation, but data users, particularly in the financial and healthcare sectors, have been powerful drivers of performance. Stock picking1 has made it possible to identify and hold quality companies in neglected or even troubled sectors.

In 2022, in a particularly complicated environment for the tech sector, Edmond de Rothschild Fund Big Data recorded a performance of -10.7%, compared with -12.8% for the benchmark index, representing an outperformance of more than 2%. In addition, annualised performance has been +12.2% since the fund’s launch, compared with 9.8% for the benchmark2.

1 Values selection.
2 AE share performance. Data as at 30/05/2023.

The information on securities contained in this document should in no way be interpreted as the opinion of Edmond de Rothschild Asset Management (France) on the future price performance of the companies mentioned or, where applicable, on the likely price performance of financial instruments that these companies may issue. The information contained in this document should not be considered as an offer to buy or sell these shares. Portfolio trends are likely to change over time. *The identity of the manager in this document may change during the life of the product.

This is an advertising communication. Please refer to the fund’s prospectus and key investor information document before making any final investment decision.

Past performance and volatility are not indicative of future performance and volatility, are not constant over time and may be independently affected by changes in exchange rates. The investment process described above incorporates various internal management constraints implemented by the management team. This is the process currently underway, although it may change over time.

 

MAIN INVESTMENT RISKS

Edmond de Rothschild Fund Big Data is a sub-fund of the Luxembourg-registered SICAV approved by the CSSF and authorised for marketing in France, Austria, Germany, Switzerland, Italy, Taiwan, Belgium, the United Kingdom, Luxembourg and Spain.

The risk indicator rates this fund on a scale of 1 to 7. This indicator is used to assess the level of risk of this product compared with other UCIs, and the mention of a category 1 does not mean that the investment is risk-free. The AE share is rated category 4. It also indicates the likelihood of this product incurring losses in the event of market movements or our inability to pay you. This indicator assumes that you hold the product until the end of the recommended holding period. The real risk may be very different if you opt to exit the fund before the end of the recommended holding period.
The risks described below are not exhaustive.
Concentration risk: Investments in specific sectors of the economy may have negative consequences in the event of devaluation of the sectors concerned.)
Risk of capital loss: The Fund does not guarantee or protect the capital invested. Investors may therefore not recover the full amount of their initial capital invested, even if they hold their units for the recommended investment period.
Risk of investing in small and medium-sized companies: Investing in small and medium-sized companies may involve greater risk than that generally associated with investments in larger, more established companies. The value of Sub-Funds investing in smaller companies may fluctuate more than that of other Sub-Funds due to the potentially greater volatility of share prices of smaller companies.
Equity risk : The value of a share may vary according to factors specific to the issuer as well as exogenous, political or economic factors. The Fund may be exposed to the equity markets either through direct investment in equities and/or through financial contracts and/or UCITS. Fluctuations in the equity markets may lead to significant variations in net assets, which may have a negative impact on the Fund’s performance.

The characteristics of the UCI do not protect the investor from the potential effect of inflation during the period of investment in the UCI. This means that the principal amount invested and any income from movable property received during the period will not be increased by the rate of inflation over the same period. As a result, the real performance of the UCI, i.e. the net performance of the UCI adjusted for inflation, could be negative.

June 2023. This document is issued by Edmond de Rothschild Asset Management (France). Non-contractual document designed for information purposes only. Reproduction or use of its content is strictly prohibited without the permission of the Edmond de Rothschild Group. The information contained in this document does not constitute an offer or solicitation to act in any jurisdiction in which such offer or solicitation is unlawful or in which the person making such offer or solicitation is not authorized to act. This document does not constitute and should not be construed as investment, tax or legal advice, or a recommendation to buy, sell or continue to hold an investment. The Edmond de Rothschild Group may not be held liable for any investment or disinvestment decision taken on the basis of this information. The UCIs presented may not be authorised for marketing in your country of residence. If you have any doubts about your ability to invest in a UCI, please contact your usual adviser. The figures, comments, projections and other information contained in this presentation reflect the Edmond de Rothschild Group’s view of the markets, their development and regulations, taking into account its expertise, the economic context and the information available to date. They may no longer be relevant on the day the investor becomes aware of them. Consequently, the Edmond de Rothschild Group cannot be held responsible for the quality or accuracy of economic information and data obtained from third parties. All investments involve specific risks. Investors are advised to ensure that any investment is suitable for their personal circumstances by seeking independent advice where appropriate. Investors should also read the Key Investor Information Document (KIID) and/or any other document required by local regulations, which is provided prior to any subscription and is available in French and English on the www.edmond-de-rothschild.com website under the “Fund Center” tab, or can be obtained free of charge on request. You can obtain a summary of investors’ rights in French and English at the following link: https://www.edmond-de-rothschild.com/SiteCollectionDocuments/LegalWebPartSiteDocument/ France/_documents-reglementaires/EdRAM-France/EDRAM-FR-Principaux-droits-des-investisseurs.pdf. The Management Company may decide to cease marketing this Fund, in accordance with Article 93a of Directive 2009/65/EC and Article 32a of Directive 2011/61/EU. “Edmond de Rothschild Asset Management” or “EdRAM” is the trade name of the asset management entities of the Edmond de Rothschild Group. Edmond de Rothschild Fund Big Data is registered under CNMV number 229. Source of information: unless otherwise indicated, the sources used in this document are those of the Edmond de Rothschild Group. © Copyright Edmond de Rothschild. All rights reserved.

GLOBAL DISTRIBUTOR
EDMOND DE ROTHSCHILD ASSET MANAGEMENT (FRANCE)
47, rue du Faubourg Saint-Honoré, 75401 Paris Cedex 08
Société anonyme à Directoire et Conseil de Surveillance au capital de 11.033.769 euros
Numéro d’agrément AMF GP 04000015 – 332.652.536 R.C.S. Paris
MANAGEMENT COMPANY
EDMOND DE ROTHSCHILD ASSET MANAGEMENT (LUXEMBOURG)
4 rue Robert Stumper, L-2557 Luxembourg
DELEGATED FINANCIAL MANAGEMENT
EDMOND DE ROTHSCHILD ASSET MANAGEMENT (FRANCE)
47, rue du Faubourg Saint-Honoré, 75401 Paris Cedex 08

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