Fund Rationale: BlackRock BGF Next Generation Technology Fund

BlackRock BGF Next Generation Technology Fund (the "Fund")
SGD Hedged Class D2 Accumulation Shares (ISIN: LU2290526321)
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Endowus has selected the Fund as it offers:

  • Diversified growth exposure across various geographies and sectors with a small & mid cap bias, including private companies, to allocate into emergent companies positioned for long-term growth;
  • Unconventional approach to cover a vast universe of tech companies, defined by proprietary taxonomy;
  • Highly experienced PM and team that implement a disciplined top-down, bottom-up process to cover a vast universe of opportunities in the most effective and long-term oriented manner; and
  • Clean share class with no trailer fees to achieve the lowest possible fees.

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Key Information

Fund Objective: The Fund seeks to maximise total return by investing globally and primarily in the equity securities of companies globally whose predominant economic activity comprises the research, development, production and/or distribution of new and emerging technology.

Suitability: Investors who seek to maximise total return, seek to invest in equity securities of companies globally whose predominant economic activity comprises the research, development, production and/or distribution of new and emerging technology, and are informed investors willing to adopt capital and income risk.

Cost:
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  1. Total Fund-level Fees include fund management fee of 0.68%.
  2. This is a clean share class that offers the lowest possible fees. There are no trailer fees for clean share classes.
  3. Endowus do not charge a preliminary sales charge or any other additional fees, other than the all-in Endowus Access Fee.

Fund Characteristics

Fund Inception: 4 September 2018
Share Class Inception: 24 February 2021
Benchmark: N/A (Endowus typically uses the MSCI ACWI equity index and the Bloomberg Barclays Global Aggregate fixed income index as representative indexes to benchmark performance over the long term.) 

Fund AUM: SGD 8.2bn
Source: MorningStar as of 24 June 2021. Please refer to the FMC page for the most updated AUM.

Regional Allocation:
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Sector Allocation:
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Source: MorningStar as of 31 May 2021. Allocation data indicate actual exposure as a percentage of the Fund's total Net Asset Value. Please refer to the Fund Manager Page for the most updated information on Fund Holdings and Breakdown.

Selection Criteria

Endowus has selected the BlackRock BGF Next Generation Technology Fund for its unconventional approaches in delivering superior returns through a portfolio of “Opportunistic” companies, with a unique focus on smaller cap companies across various geographies and sectors possessing innovative technologies.

We like the Fund’s diversified portfolio that holds 100 to 120 different companies across smaller market capitalisations (mid-to-small cap) and geographies. With a fundamental-driven focus to identify companies with attractive future growth potentials, the Fund considers an investable universe of “Opportunistic” companies (emergent companies with innovative technology), including a private company allocation of up to 2% -- the resulting portfolio is underweight on common market favourites, and attempts to generate alpha from smaller, innovative companies with greater future trajectories.

The Fund’s systematic investment process is another factor that sets the strategy apart from its peers -- unlike most other funds in the technology space that depend solely on bottom-up research, the Fund approaches the universe via a top-down analysis to identify macro themes that are likely to affect the value chains and lifestyles of users worldwide, before mapping the trends into strategic sub sectors that will benefit from such developments in the long term, using a proprietary universe taxonomy that is agnostic of traditional sector guidelines . All in all, we think the Fund offers a unique, value-added approach to own high-potential global technology companies to maximise returns in the long run.

In another unconventional approach, the BlackRock Technology team adopts a collaborative workflow of having the PMs and Analysts covering the entire investments together, rather than having siloed analysts who specialise in certain industries and geographies. This allows for greater scalability in identifying opportunities from a universe of more than 3000 public and private technology companies worldwide. The team, based in San Francisco, also benefits from its proximity to Silicon Valley to gain access to emerging and established technology companies, as well as the latest developments in the tech scene. The strategy is run by Lead PM Tony Kim and Co-PM Reid Menge; Tony Kim, in particular, has overseen the strategy since 2013 and has spent over 20 years covering the technology sector, creating the strategy’s various unique industry-agnostic approaches.

Although the Fund has a short track record (inception in 2018), it has so far succeeded in delivering stellar performances in line with its investment objective. Given the systematic investment processes involved, as well as the team’s proven expertise in running a sister fund (Blackrock BGF World Technology, which is also available on Endowus), we think the Fund should continue to outperform its peers in the universe and achieve superior returns in the long term. Investors should note that, over the short term, although the Fund may experience some volatility due to its exposure to smaller cap holdings across the world, the team actively manages such risks through an active diversification mandate and strong fundamental research.

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Updated by Endowus: June 2021

** Disclaimer: Past performance should not be taken as an indication or guarantee of future performance and no representation or warranty, express or implied, is made regarding future performance. Any opinions expressed reflect a judgment at the original date of publication by us and are subject to change without notice.
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