Banking on boredom: How this AAA-rated PM escaped the tech wreckage

Unlike most tech investors, Kristofer Barrett, rated AAA by Citywire, spent many years underweight Apple.

He holds smaller positions at other industry heavyweights Google and Amazon, but has given up most of his position at high-growth SaaS companies that have recovered in 2021.

Six months into 2022, Barrett sees this as a key factor in why his Swedbank Robur Technology fund has remained afloat amid the tech wreckage that characterized the start of the year.

“We sold or avoided very high prices at selling stocks in my funds. Instead, we owned profitable tech companies that didn’t rise as much, but also didn’t fall with the rest of tech stocks,’ Barrett said. Citywire Selector.

Over a three-year period ending in May 2022, average monthly returns for the Citywire Technology sector have fallen to 48.9%, less than half of what they were at the start of the year.

The Swedbank Robur Technology fund, despite having fallen from its December 2021 highs of 144%, was able to generate returns close to 100% throughout the same period.

Most of Barrett’s top holdings aren’t exactly Robinhood household names. Its largest stocks are NVIDIA Corp and Broadcom, which together make up around 13% of the portfolio as of May 2022.

It primarily focuses on large value-driven software and semiconductor companies; the kind that Barrett says is “boring, but very profitable”.

Barrett describes “his trick” — the one that made him the only fund manager in the Citywire Global Equities Global Growth sector to successfully outperform more than 100% in the past three years — as avoiding rash decisions.

He does not buy big but makes many small adjustments over a long period of time. Selling a stock is not a next day decision. Instead, he cuts his position a bit, waits a month or two, and looks at it again.

“Like piloting a supertanker”

Part of this strategy is due to his past. “Prior to working in global equities and technology, I spent a decade covering the toughest markets and sectors in emerging markets.

“Being this broad generalist before investing in technology gave me a really good perspective of not getting caught up in the hype,” Barrett said.

Part of that also comes down to the size of his tenures.

The SEK 83 billion (€7.7 billion) Swedbank Robur Technology fund and the SEK 80 billion (€7.4 billion) Swedbank Robur Globalfond are the third and fourth largest funds in the Swedish market, surpassed only by two public pension funds.

That, Barrett said, forces him to think long term. “Most people assume it’s harder to manage big strategies, and it is, but that’s not just bad.” It’s like flying a supertanker, isn’t it?

“If you’re going to shoot, you have to plan well in advance and you don’t want to do it quickly or you’ll get stuck.” You can’t think you can outsmart the market on timing and things like that. You realize that even though you have the right timing, you don’t have time to shoot.

“So that takes the whole equation out of the equation and makes it easier, in that you have to learn to live with your positions and make long-term decisions.”

For this reason, Barrett doesn’t make too many changes to his investment process. The only change he has implemented is to focus more on highly profitable value companies that have generated strong cash flow over the past year.

This, he says, has helped keep his returns stable throughout the market turmoil in 2022. “Investing in value companies obviously served extremely well last year, but also this year, where moderate and profitable growth was rewarded significantly. »

“It’s been great to outperform in both a bull market and a weaker market, and a lot of that is a balancing act. My performance is down to being bullish and investing well in the revolution. digital, obviously accelerated by Covid-19, but also to be able to recognize the excess this has caused in terms of valuations – and to buy more value-oriented stocks that are now profitable.’