Did VW, Audi, Porsche, Daimler, and BMW collude to form a cartel? Did they deliberately try to suspend competition? The media seem to have discovered a violation of anti-trust law, and their research suggests a link between the diesel emissions scandal and the agreements reached in joint task groups.
It is almost impossible to speak with fund managers and not address the economy or monetary policy. Why is that so? This blog entry will try to answer the question on the basis of data from the US equity market from 1950 onwards.
China has been increasingly opening up to the global market. Last year the Renminbi was taken into the currency basket of the International Monetary Fund in October 2016. Now, another step towards liberalisation has followed. China has cleared A-shares for international trade via trading platforms.
Shares (equities) and equity funds – the same or not?
Only a small minority of Austrians invest directly or indirectly (via equity funds) in shares. Is it the fear of losses or the lack of knowledge about this asset class that make investors shy away from it? In this blog entry, I would like to give you an overview of the features of shares and equity funds.
After the ballots were counted on 16 April 2017, the state-run Anadolu news agency reported that “Yes” had won by securing 51.4% of the votes, which was later also confirmed by the Electoral Commission. Serious concerns were raised by the OSCE. It is also important to note that the referendum took place during a “state of emergency”. That is to say, in a highly repressive climate in which the President and the government controlled the media, jailed critical journalists and leaders of pro-Kurdish parliamentary opposition, and arbitrarily detained and prosecuted the President’s opponents. The result of the referendum has paved the way for the most controversial changes that Turkey has faced in its history.
Austria celebrates the 300th birthday of Maria Theresa. She was born on 13 May 1717 in Vienna. It was her who founded the Vienna stock exchange in 1771 on the basis of an imperial patent (see image), after an earlier, failed attempt in 1761. Even though a lot has changed politically, economically, and technically since then, the eventful history of the Vienna stock exchange is still very instructive for every investor.
“SELL IN MAY AND GO AWAY (BUT REMEMBER TO COME BACK IN SEPTEMBER)”
Who has not heard of the old stock exchange rule “Sell in May and go away” – sometimes complemented by “but remember to come back in September”. We had a closer look at this adage and have analysed the performance on the global stock exchanges over the past 48 years. To this end, we looked at an index that measures exactly that: the company MSCI launched its MSCI World index on 1 January 1970, This is also the start date of our analysis.
Author: Bernhard Ruttenstorfer
Senior Fundmanager Equities
At this year’s IT trade fair CEBIT, the focus was on robots that support humans in their daily routine; on drones that can be used for difficult jobs in the field such as oil rigs; driverless electro busses that are steered by sensors and accelerate and stop autonomously; and various other technological innovations that are no fiction but have in fact already entered our daily lives. Of what relevance are they for the economy, for companies, for consumers – and for investors?
Technologies that support mankind
The information technology (IT) sector has transformed dramatically over the past 20 years. While back in the days “IT” primarily meant personal computers and the first internet applications, the meaning of these technologies has changed comprehensively since then. IT-specific products and solutions are employed across many sectors: communications, traffic, healthcare, manufacturing, retail, safety, consumer goods etc. How do the aforementioned megatrends manifest themselves? Critics will quickly point out that this is all about replacing man with machinery. But haven’t we been hearing this sort of scepticism for years? Should we not approach this situation from the other end? Is this not all about machinery and technologies that support mankind?
Data: the big business
In most cases the benefits of technological progress are of relevance when two or more developments meet and cross-fertilise each other. Cloud computing and social networks are a good example: cloud computing allows the user to access their applications from various interfaces (smartphone, tablet, PC) and to process data there. Facebook, with more than 1.8bn users, offers exactly those options: the users can upload photos, videos, or other information to their account at all times. Data and not stored on the device, but on a server operated by facebook (private cloud). There they can be accessed 24/7. With other kinds of clouds, the data are not processed on servers of the software provider, but via the infrastructure/server of external server providers (public cloud). The US online video library Netflix uses this technology. Netflix film material is also stored on servers of the (also) listed US online mail order company Amazon. Users access it via streaming. The advantage is that companies and users can employ their resources more efficiently: Netflix rents the capacity that its users actually require on a continuous basis. The users can watch films whenever and especially wherever they want: on the TV set at home, on the laptop, or on the mobile phone.
Big step from automatic parking to autonomous driving?
The topic of robotics has also become more prominent. Industrie 4.0, “Internet of Things”, Autonomous Driving – all these applications rely on data processing via cloud services. The ongoing improvement of sensor capacity has fostered their increasing popularity. In combination with specific software, new fields of application emerge. Autonomous driving is currently a media buzzword. The investments by leading companies are promising. Google, NVidia, or Tesla, to name but a few, are constantly making progress. While the step to the commercial use of autonomous driving may still be a sizeable one, the functions supporting the driver are already in use today. Lane departure warning system, automatic parking, and automatic braking are no uncharted territory for drivers anymore.
Significant earnings increase of listed technology companies
The developments of the past years are also reflected in the financial results of the listed technology companies despite the slight decrease in growth in 2016 due to intermittently reduced IT investments. The consensus estimates of analysts forecast earnings growth of more than 10% p.a. for 2017 to 2019. Share prices have also risen impressively in the IT sector. The robust earnings increase keeps valuations stable and below the long-term average.
It is the combination of megatrends and economically successful companies from the IT sector that confirms our positive attitude towards the technology sector. The megatrends in this sector ensure continuous growth in the coming years. The applications are integrated into the process of companies and the economy on an ongoing basis. The possibilities for consumers to use these technologies are being expanded.
Investing in technology stocks
The ESPA STOCK TECHNO* offers the chance to invest in the high-growth technology sector. This equity fund of ERSTE-SPARINVEST contains the most important technology companies worldwide. ESPA STOCK TECHNO works also as additional fund in an already existing equity portfolio mix and is suitable for investors with adequate willingness to assume risk and with a long-term horizon.
The author: Bernhard Ruttenstorfer is Senior Fund Manager in the equity fund management team of ERSTE-SPARINVEST and has been responsible for ESPA STOCK TECHNO since July 2010. He holds a Master in Business Administration from the Vienna University of Economics and Business Administration and the degree of Certified Portfolio Manager (CPM).
*Risk notes according to 2011 Austrian Investment Fund Act
ESPA STOCK TECHNO may exhibit increased volatility due to the composition of its portfolio: i.e. the unit value can be subject to significant fluctuations both upwards and downwards within short periods of time.
The stock exchanges in the emerging economies and their performances have fallen short of expectations in recent years. Speculations about the weakening economy of China, the decline of commodity prices, and an appreciating US dollar have had a detrimental effect on emerging markets. However, the trust of investors in these markets has been making a comeback since 2016. In spite of Donald Trump’s election victory and the fear of a US policy of protectionism, the emerging economies are currently outperforming the developed ones.
Many investors focus on capital gains while disregarding the significance of dividends. And are wrong in doing so, from my point of view. The total return of a share is after all the sum of capital gains (i.e. rising prices) and dividend income. Income from dividends is of particular relevance for investors with a long-term investment horizon.