Interview with fund manager Bernhard Selinger
What sort of performance did the fund achieve in the first half of 2022?
To answer this question, I have to set a wider context: we could call 2020 “the online year”. The new and extraordinary situation created by the pandemic acted as trend accelerator for all things digital (e.g. online commerce, streaming, video communication) and graced these areas with outstanding rates of growth. At hindsight, both stock exchange and analysts were too optimistic, extrapolating the growth rates from the exceptional year of 2020 into the future.
The “offline sectors” and their shares spent the year 2021 closing the gap. All of us wanted to experience things again that had not been possible for a while, e.g. go shopping in brick and mortar shops, eat out, or travel. Many of our newly established digital habits were here to stay (e.g. online commerce, streaming), even though the growth rates in many areas failed to reach the levels of 2020.
The market therefore had to revise its growth expectations for many technology companies from excessive to sustainably realistic, which caused pressure on prices and valuations.
In addition, the market had to deal with general worries about economic growth in 2022 on account of the interest rate reversal resulting from the strong inflation momentum, ongoing supply chain problems in the corporate sector, and the turbulences caused by the conflict between Russia and Ukraine.
The expected interest rate increases had a particularly negative impact on the growth shares in the fund, because from a valuation perspective their future earnings were suddenly being discounted at a higher rate. The effects on operations themselves are limited for technology companies, not the least as they are generally not highly leveraged and have sufficient liquidity for investments at their disposal.