Turnkey Tech Investing: June 2021 Market Brief

By Bill Studebaker, CIO & President, ROBO Global

 

Shockingly, the US economy accelerated in June to surpass its pre-COVID peak just nine months after the trough of the most recent recession. Few investors could have imagined such an outcome a year ago as businesses were shuttered and the global economy slowed to a crawl at the height of the pandemic.

How was such a rapid recovery possible? In nearly every market sector, the credit goes to the power of AI and automation. With the aid of these innovations, profits returned to peak levels faster than anticipated, and many companies were able to circumvent the effects of the recession completely. Rather than suffering losses, essential businesses and technology enablers were able to achieve sales growth and record profitability. And though a slower vaccine rollout caused the EU’s re-opening of trade to lag, investors have (believe it or not!) begun to shift a portion of their EM and China Internet exposure into Europe—a change that also bodes well for the growth in the AI and automation sectors.

Despite the second-best, first-half year performance since 1998 (behind 2019) for the S&P 500, sentiment feels shaky at the halfway mark of 2021. That said, while the ACWI was essentially flat in June, rising a modest +1.36%, all the ROBO Global ETFs posted welcome growth. The ROBO ETF was up +2.05%, the HTEC ETF rose +7.05%, and the THNQ ETF led the pack at +7.22%. As we head into July, all major global indices are on track to be up +25% y/y if YTD trends hold1.  

Looking back to this time last year, we were battling the virus, virtually weaponless aside from masks and social distancing measures. Luckily, major advancements in healthcare enabled researchers to fast-track the development of multiple vaccines. Now, about 6 months into the global vaccination campaign, cases and death rates are much lower in most parts of the world. Even so, every day we are reminded that this fight against the pandemic is not over. As new variants emerge and hotspots like Brazil suffer, it is clear that the world remains vulnerable to the virus. I continue to feel grateful for science and healthcare—and for the many holdings within HTEC that are on the frontlines in saving humanity. 

One example is Intellia Therapeutics (NTLA). The company, in collaboration with partner Regeneron, recently announced a milestone in gene editing: the successful in-vivo gene edit of an organ inside the body, which enabled an 87% reduction in protein buildup using a custom lipid nanoparticle (LNP) delivery system—the system employed by the mRNA Covid vaccines. This is an important advancement in the treatment of ATTR, a rare, genetic/inherited condition that causes liver-created TTR protein build-up in the heart and affects 200-300k people worldwide. Without treatment, ATTR causes death from cardiomyopathy (heart disease) within just 2.5 years. Even with treatment, the average survival rate after diagnosis is just 7 years. The new gene-editing capability is poised to improve those statistics dramatically. One patient in the study demonstrated a life-saving 96% reduction in serum TTR.

Innovations like this illustrate how combining CRISPR editing and proper delivery mechanisms can change the course of healthcare. Already, Intellia and others are creating potentially permanent changes and single-dose cures for many inherited diseases in-vivo. The next step: targeting hard-to-reach areas like the brain, other organs, and bone marrow. The impact of this convergence of DNA sequencing, AI, and gene editing is likely to be massive. Millions or billions of lives will be extended, healthcare costs will plummet, and current economic models will be turned upside down.

As a global community, we have learned much since COVID-19 reared its ugly head in early 2020. We’ve seen how a raging virus can devastate families, communities, businesses, and economies. And we’ve witnessed just how resilient we can be in the face of such a foe. Thanks to advancements in healthcare and AI, we are slowly rely eliminating the threat of COVID. But as critical as that achievement may be, there are many other challenges to address to make our world safer, healthier, and more productive. The pandemic has shown the world that AI and automation are key to achieving these goals. As we at ROBO Global continue to advise, we believe the time to invest in AI, automation, and healthcare technologies is now.

 

 

ROBO Top Ten Holdings, HTEC Top Ten Holdings, THNQ Top Ten Holdings

 

1 Source: ROBO Global®, S&P CapitalIQ, For standardized performance data current to the most recent month end, please visit www.roboglobaletfs.com.

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