One tech fund is capitalizing on the artificial intelligence boom, outperforming 90% of its peers this year. Adam Benjamin, fund manager of the $9.5 billion Fidelity Select Technology Fund (FSPTX) said: Mutual funds are up 22% in 2023 and he outperforms Nasdaq Composite, up 15%. He also has a solid long-term track record, with a 15.7% annualized return over the past 15 years, according to Morningstar, placing him in the 10th percentile. Companies that rushed to embrace digital transformation during the pandemic continue to seek ways to improve efficiency through large-scale language models like his ChatGPT enabled by AI, he said. said. The biggest facilitator in the industry is arguably he’s Nvidia, he said. “Nvidia is the enabler for that,” he said. Nvidia “is the single biggest beneficiary when it comes to AI,” he added. Chip stock is his third-largest holding in the Fidelity fund, with a weight of over 8%. Nvidia’s stock surged 84% this year, fueled by the biggest quarterly rally since 2001. It’s already hurt sales of personal computers and semiconductors. Benjamin, a 13-year veteran of his at Fidelity after stints at Jefferies and Cowen, says Nvidia has long invested heavily in modeling and full-stack developers to solve AI problems. , said it can now help companies fully adopt AI. “Nvidia is very good in terms of who is driving the adoption of this technology and who is going to be the enabler of this technology,” said Benjamin. “Then it really drops in.” Benjamin, a government major at Cornell University, has a strong background in industry research and previously headed Jefferies’ semiconductor equity research. Fidelity Select Tech’s top holdings include semiconductor companies such as Marvell Technologies, NXP Semiconductors, ON Semiconductor and GlobalFoundries. The threat of rising interest rates Certainly, rising interest rates have been a top concern for tech investors over the past year. Rising borrowing costs crushed tech companies last year as rising interest rates slashed valuations, slashed the present value of future earnings, and pushed up borrowing costs. Benjamin said software is the technology sector most sensitive to interest rates. The manager said he started 2023 with less than average exposure to software. “It’s had the biggest impact on software providers,” he said of the Fed’s tightening policy. Entering a period of rising interest rates, software was “probably several orders of magnitude higher than historical valuations,” Benjamin said. Benjamin said the sector is starting to see opportunities now that stocks and valuations have retreated. Among software names, his fund owns his Salesforce, Splunk and ServiceNow. “We’re getting to the point where these companies’ estimates are going down significantly,” Benjamin said. “I think it’s created some interesting opportunities that we’ve taken advantage of in our portfolio.” Rate he is 87%. The past year portfolio is an important tax consideration.
