Single Sector Fund

Nikko AM ARK Disruptive Innovation Fund

About the fund

This fund provides access to a global share portfolio that offers thematic exposure to disruptive innovation across a number of sectors and geographies.

Disruptive innovation is caused by the introduction of new technologically enabled products or services that permanently change an industry or economic sector by providing greater simplicity, accuracy, customisation and accessibility while driving down costs.

Risk Indicator (volatility)

1
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7 Extremely high

Target Asset Allocation

Growth 100.00%

Commentary

As of 30 April 2024

Market Highlights

  • Broad-based global equity indexes depreciated during the month as the number of U.S. Federal Reserve (Fed) rate cuts expected in 2024 dropped.
  • Relative to the MSCI World Index, the Utilities and Energy sectors outperformed on balance in April, while the Real Estate and Technology sectors lagged.


Key contributors for the month include Tesla (TSLA), Spotify Technology (SPOT) and Teradyne (TER).

Tesla was a contributor to the fund finishing the month higher post earnings. Concerns loomed over a slowdown in EV demand. On its earnings call, Elon Musk announced that the company announced layoffs that affected more than 10% of its global workforce, including senior executives and the Supercharger team. Tesla received tentative approval for its driving system in China and maintained the industry's lowest 10-year cost of maintenance and repair. Spotify was a contributor to the fund this month. The company reported strong first quarter earnings, with total revenue growing around 20% year-over-year on a constant currency basis. Gross profit also surprised on the upside, with gross margin expanding to 27.6%. Teradyne was a contributor to the fund this month as it reported earnings that beat on both the top and bottom line and it increased guidance for the second quarter. Despite continued weakness in the smartphone market, greater than expected memory and networking demand driven by artificial intelligence applications drove company revenue and earnings above the high end of management's guidance in the quarter.

Key detractors for the month include Coinbase Global (COIN), Block (SQ) and CRISPR Therapeutics (CRSP).

Coinbase and Robinhood detracted from the fund this month as Bitcoin and the broader cryptocurrency market shed their gains. Block was a detractor to the fund this month. A sell side firm issued a downgrade on the stock to underweight early in the month. The FDIC also issued a consent order against fintech sponsor bank Sutton Bank, which issues prepaid debit cards for Block's Cash App, potentially increasing regulatory scrutiny on the banks' customers. CRISPR Therapeutics was a detractor to the fund this month, despite the Centers for Medicare & Medicaid Services (CMS) announcing plans to increase reimbursement for new sickle cell gene therapies, a move that could potentially benefit CRISPR Therapeutics since it developed and commercialized CASGEVY, the gene editing based therapy for sickle cell disease.

Performance

Nikko AM Investment Scheme
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Performance

at 31 May 2024
One month Three months One year Three years (p.a) Five years (p.a)
Fund performance1 -5.47% -12.96% 9.58% -21.07%
Appropriate Market Index (AMI)2 2.35% 1.95% 27.72% 17.67%
  1. Returns are before tax and after the deduction of fees and expenses and including tax credits (if any).
  2. AMI: NASDAQ-100 Notional Net Total Return Index in NZD

Cumulative Returns Since Inception, $10,000 invested

Top 10 Holdings

Security Name Percentage
Tesla Motors Inc 8.86%
Coinbase Global Inc 6.91%
Roku Inc 6.14%
Block Inc 5.31%
Roblox Corp 4.88%
Robinhood Markets Inc 4.74%
Zoom Video Communications Inc 4.11%
Palantir Technologies Inc 4.02%
Shopify Inc 3.42%
Facebook Inc Com Usd Cl A 3.35%
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