Our RAIA fund has outperformed its sector peers so far this year. Below, portfolio manager Dr Yun Sun explains why.
The RAIA portfolio built up a 25% return over the period from the beginning of 2021 to the middle of February. The concentrated nature of the portfolio maximised the tailwind we experienced from our exposure to the space economy, to 3D printing and to data analytics software — all of which we have had in place since last November. Our top five names — each with a portfolio allocation of between 5% and 9% — collectively contributed more than 85% of our return. This sector-leading performance gave the fund a good buffer against comparable peers.
After the 9th of February, the tech sector entered a drawdown phase. During the market selloff, the performances of our top holdings were hit, along with those of other technology-related growth names. However, the RAIA portfolio contains some significant weightings in non-US, value, large-cap names which helped preserve some 5% of return. Also, we had a hedge in place ahead of Virgin Galactic’s scheduled test flight which completely neutralised the negative performance that followed its postponement.
In summary, RAIA was well-positioned to capitalise on the strong performance of the disruptive growth names in the first part of the year. More recently, the defensive aspects of the portfolio acted as a safety net and cushioned the subsequent brief downturn.
RAIA has contained around 30 holdings since last November and this has not changed significantly since — even with the recent market sell off. We intend to hold the same portfolio shape for the foreseeable future as the mega-trends that we are exposed to continue to play out.