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Selector case study: the ins and outs of backing Pictet-Robotics

Selector case study: the ins and outs of backing Pictet-Robotics

The Pictet-Robotics fund has very quickly emerged as a fund selector favourite, closing to new investor just 18 months after launch following a sudden influx of assets.

While investment in robotics isn’t a new concept, the surge in net new money has led to increased scrutiny over how the Swiss firm will keep this specific fund ahead of the market.

Recent developments have seen founding portfolio manager Karen Kharmandarian step down to undertake a different role within the firm’s thematics team – a move that caused some consternation among the selector community.

Citywire AAA-rated Peter Lingen remains on the fund, now partnered with tech analyst-turned-fund manager John Gladwyn. But will this new look team retain investor interest and the initial hype around the fund’s strategy?

Here, Paulo Gonçalves (pictured below), fund selector at Portuguese group Popular Gestao de Activos, explains what drew him to the fund, his thoughts on thematics in general and whether the soft-close measures will aid continued outperformance or create unwanted public interest.

What history do you have of investing in thematic funds in general?

We invested in another of Pictet’s thematic funds 11 years ago – the Pictet-Security fund – which also has elements of disruptive technologies. In this case it was related to security themes, which are increasingly necessary given growing global threats such as terrorism and the challenges created by new ways of living in modern societies. Even with the big losses we suffered in 2008, it has been a successful part of our exposure and remains so today.

Were you among the first investors in the Robotics fund when it was launched?

We invested in the Pictet-Security fund just one month after it was launched, but we waited a whole year to invest in the Pictet-Robotics fund. This was due to our initial scepticism, but after reading about developments in this area – as well as AI and its impact on our daily lives – we finally decided to commit to this theme.

Is this a short-term fad or do you envision funds such as Pictet-Robotics being part of a wider trend which investors should capitalise on?

We expect robots to play a much bigger role in Japan, where there is an aging population, and in China, where wage increases will induce industries to substitute more human workers with robots.

Even in the US, the re-industrialization imagined under the Trump administration could lead to more robot jobs in place of unskilled workers. There is also the increased role of AI in many aspects of our lives, which makes us think that we will see continued growth in this theme in general.

The fund's success has led to rivals launching similar strategies – can it retain its competitive edge and would you consider expanding your investment in this specialist field even further?

We were lucky to have invested before the fund soft-closed but even if we were unable to invest in this particular fund, we may have gone elsewhere, as we have found at least three other funds in our analysis that are using a same theme. So it's possible we would have invested with one of them.

We have already increased our position in the fund following the soft closure and we think this theme has good potential to produce very good performance building on its initial success. 

How does the change in team management impact your view of the fund?

We were advised that the management team would be reshuffled on August 1 with Kharmandarian taking on a new role within the thematic equities team. The team would then be composed of Peter Lingen and John Gladwyn, who had previously worked in the investment team for a $2 billion portfolio of long-only technology funds at Polar Capital Partners from 2015.

We were a little bit surprised by the change in the management team given the fund's huge success both in performance and AUM. However, we were assured that the professional experience of the new team meant it would continue to be successful.

We will keep a close watch on the evolution of this fund to see if the team is able to achieve the same success.