Why invest in high-tech?

Many believe that investing in high-tech equities is almost a guaranteed success. After all, the high-tech sector has the strongest long-term growth in turnover and profits.

Enormous dynamics have advantages and disadvantages

However, there is hardly any other industry where more companies – and consequently investors – start with high hopes and fail spectacularly. Similarly, market leaders can change faster in this sector than almost anywhere else. Last year, the 'Magnificent Seven' (Nvidia, Apple, Microsoft, Meta, Amazon, Alphabet, Tesla) made headlines. They surged significantly and, due to their high and growing market weight, almost single-handedly pulled major US stock indices upwards. However, the very high and still increasing market weight of these few stocks is becoming increasingly problematic for investors in terms of investability and risk management (diversification).

Current market trends in the technology sector

In recent weeks and months, the stock markets have increasingly been preparing for the possibility of a Donald Trump victory in the presidential election. After Trump and his Republican Party also won the majority in the Senate and narrowly defended their majority in the House of Representatives, Trump has a largely free hand when it comes to legislative proposals.

The current main concern in the technology sector is whether and what new export restrictions may be imposed on semiconductors. The chip giant Nvidia (which has long been the largest single position in the fund with the maximum possible share of 10%) remains largely unaffected by this and continues to benefit from extremely high demand for AI chips. However, almost all other chip manufacturers, as well as many companies producing raw materials for chip production, have recently declined noticeably.

Investors withdrew capital from the semiconductor sector and reallocated some of it to other technology sectors that are likely to be less affected by any trade restrictions imposed by a Trump administration, such as software companies and cloud providers.

Once there is greater clarity about Trump's specific intentions and if these turn out to be less severe than currently feared, previously withdrawn capital could quickly flow back in. Until then, however, the semiconductor sector in particular is likely to remain affected by uncertainty, leading to a generally more cautious positioning by many investors.

High tech is a broad, highly complex field of business

For investors in the high-tech sector, this means that important developments always have to be monitored, in order to identify the most promising emerging companies at an early stage as well as to be able to jettison equities in a timely manner when they have passed their prime and their market position is liable to permanently deteriorate. Naturally, it is also very important to carefully consider whether the price for a equity is appropriate. Strong growth is cold comfort if the price you pay is too high. It makes sense to concentrate on a few especially important, promising aspects and areas.

What does the Raiffeisen ESG Visoka tehnologija delniški focus on?

The fund Raiffeisen ESG Visoka tehnologija delniški focuses on companies with particularly strong growth and/or disruptive innovations. Disruptive innovations are new products and processes that radically transform existing products and technologies, and often entire industries and societies. Think of the light bulb, the telephone, the assembly line, or the internet! Disruptive innovations and technologies regularly lead to exponential growth in productivity – and subsequently often in many areas that were initially not directly affected. The key point is that both the extent and the pace of the resulting changes are almost always underestimated by investors. This, in turn, creates plenty of opportunities for those who fully or at least better understand the potential for change.

Accentuated investment decisions and sustainable investing in Raiffeisen-HighTech-ESG-Aktien

In order to make the best possible use of earnings potential, the fund management of Raiffeisen ESG Visoka tehnologija delniški relies on a relatively concentrated portfolio of around 40 shares. On the one hand, this allows for sufficiently good diversification and, on the other hand, the individual positions in the fund can make quite strong contributions to earnings. Active management with accentuated investment decisions (and thus also deliberate strong deviations from conventional sector indices) is the motto. At the same time, the fund invests in accordance with ESG criteria.

Excellent performance since fund launch

Since its launch over 20 years ago, the Raiffeisen ESG Visoka tehnologija delniški has also shown one of the strongest annual performances of all Raiffeisen KAG funds. In its peer group, it ranks among the top performers both in the short term and over long periods of time. Before you place a buy order immediately: This performance has also been accompanied by significant price fluctuations and setbacks. Therefore, it requires both a long-term perspective (i.e., an investment horizon of at least 10 years) and a high tolerance for risk and willingness to take risks. It should be noted that the very good past performance is no guarantee of future returns and does not allow any conclusions to be drawn about the future performance of the fund.

The four areas of the high-tech fund in detail

The fund Raiffeisen ESG Visoka tehnologija delniški exhibits elevated volatility, meaning that unit prices can move significantly higher or lower in short periods of time, and it is not possible to rule out loss of capital.