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Blue Whale Update: Half Year 2023 Performance Update

Stephen Yiu - Blue Whale Fund Manager

 

Stephen Yiu is the Chief Investment Officer at Blue Whale Capital and Lead Manager of the Blue Whale Growth Fund.

Stephen co-founded Blue Whale Capital with Peter Hargreaves, co-founder of Hargreaves Lansdown, in 2016. The Blue Whale Growth Fund was launched in September 2020 and is a long-only global equity fund focusing on developed markets.

Stephen adopts a high conviction, active approach based on
bottom-up, fundamental research.

The first half of 2023 saw a return to outperformance for the Blue Whale Growth Fund, following a particularly volatile year in 2022. The fund delivered performance of +20.2% (T Acc USD Class), +18.3% (T Acc EUR Class), and +14.4% (T Acc GBP Class) versus the IA Global sector average of +6.4% from the start of the year to 30 June 2023. Please note that past performance is not a guide to future performance.

The themes delivering performance for the fund were varied, from investments in AI beneficiaries (Nvidia) and the requirement for silicon sovereignty (ASML and Lam Research), to the evergreen theme of digital transformation (Microsoft and Adobe) and finally net inflation beneficiaries (Mastercard and Visa).

The quick success of AI platforms such as ChatGPT saw a huge uptick in the price of Nvidia in particular – a company in which we have held strong conviction for more than 2 years. Despite a plethora of naysayers in the market, we remained invested and even added to our position at deflated prices in 2022. The stock was up nearly 200% in the first half of 2023 and stands well above its previous peak of November 2021.

Whilst 2023 has been benign for selected technology businesses, other sectors have experienced their fair share of disappointment – most notably banks. Consequently, our investment in Charles Schwab has been one of the main detractors from performance in the year so far. Worries over solvency of US banks – particularly smaller, regional lenders – led to a sector-wide nosedive in March this year. However, we view Charles Schwab as a net beneficiary of subsequent expected further consolidation of the US banking sector and see it as a key investment to benefit from higher interest rates as it delivers a healthy return on its cash deposits.

Sartorius was another detractor from performance as customers ran their stocks down, following a period of overstocking due to supply uncertainty. However, once this destocking process is complete, we believe that Sartorius’ sales should rebound strongly as the long-term drivers of the bioprocessing market remain healthy.

Looking forward in 2023, we remain of the view we hold a portfolio of high-quality companies whose strong fundamentals, and importance in an ever technologically advancing world, will continue to deliver outperformance for our investors.

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Blue Whale Growth Fund is manufactured by Blue Whale Capital LLP and represented in Malta by MeDirect Bank (Malta) plc.

 


Blue Whale Key Risks & Disclaimers:

The Blue Whale Growth Fund was launched in September 2020. All references to actions before this date relate to the LF Blue Whale Growth Fund.  Information on the LF Blue Whale Growth Fund is provided for comparison purposes only; it is a UK UCITS which is not registered for sale in nor is it promoted to investors in the EEA.  Whilst the investment objectives and charges are not identical, both funds are run on the same investment process.

Please note that the information provided in this article is not to be construed as advice and any views we express on holdings do not constitute investment recommendations and must not be viewed as such. If you are unsure as to the suitability of an investment for your circumstances, please seek independent financial advice. Investments can go down in value as well as up so you may get back less than you invested. Your capital is at risk. Past performance is not a guide to future performance.Blue Whale Capital LLP is authorised and regulated by the UK Financial Conduct Authority.

There are significant risks associated with investment in the Fund referred to herein. Investment in the Fund is intended for investors who understand and can accept the risks associated with such an investment including potentially a substantial or complete loss of their investment.

Past performance is not a guide to future performance. The value of investments and any income derived from them can go down as well as up and the value of your investment may be volatile and be subject to sudden and substantial falls.

Investment in a Fund with exposure to emerging markets involves risk factors and special considerations which may not be typically associated with investing in more developed markets. Political or economic change and instability may be more likely to occur and have a greater effect on the economies and markets of emerging countries. Adverse government policies, taxation, restrictions on foreign investment and on currency convertibility and repatriation, currency fluctuations and other developments in the laws and regulations of emerging countries in which investment may be made, including expropriation, nationalisation or other confiscation could result in loss to the Fund.

Income from investments may fluctuate. Changes in rates of exchange may have an adverse effect on the value, price or income of investments. Fund charges may be applied in whole or part to capital, which may result in capital erosion. The Authorised Corporate Director may apply a dilution adjustment as detailed in the Prospectus. The Fund is not traded on an exchange or recognised market.

The foregoing list of risk factors is not complete, and reference should be made to the Fund’s Prospectus, KIID and application form.


MeDirect Disclaimers:

This information has been accurately reproduced, as received from Blue Whale Growth Fund. No information has been omitted which would render the reproduced information inaccurate or misleading. This information is being distributed by MeDirect Bank (Malta) plc to its customers. The information contained in this document is for general information purposes only and is not intended to provide legal or other professional advice nor does it commit MeDirect Bank (Malta) plc to any obligation whatsoever. The information available in this document is not intended to be a suggestion, recommendation or solicitation to buy, hold or sell, any securities and is not guaranteed as to accuracy or completeness.

The financial instruments discussed in the document may not be suitable for all investors and investors must make their own informed decisions and seek their own advice regarding the appropriateness of investing in financial instruments or implementing strategies discussed herein.

If you invest in this product you may lose some or all of the money you invest. The value of your investment may go down as well as up. A commission or sales fee may be charged at the time of the initial purchase for an investment. Any income you get from this investment may go down as well as up. This product may be affected by changes in currency exchange rate movements thereby affecting your investment return therefrom. The performance figures quoted refer to the past and past performance is not a guarantee of future performance or a reliable guide to future performance. Any decision to invest in a mutual fund should always be based upon the details contained in the Prospectus and Key Investor Information Document (KIID), which may be obtained from MeDirect Bank (Malta) plc.

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