M&G launches global equity AI strategy to capitalise on market disruptive, multi-year investment theme
News release
22 January 2023 – M&G Investments today announces the launch of the M&G (Lux) Global Artificial Intelligence Fund (the Fund) - an actively managed equity strategy designed to capture the multi-year investment opportunity around Artificial Intelligence (AI). At an exciting time for innovation and competition, AI represents one of the most relevant long-term growth drivers over the coming decades, as well as a disruptive market force, that is set to be a key determinant in the success and survival of many of today’s companies around the globe.
With the potential to add between US$2.6 and US$4.4 trillion (TN) to the global economy annually in productivity improvements and efficiencies1 – figures similar to the entire 2022 GDP of countries such as Japan ($4.2TN), Germany ($4TN) or the UK ($3TN)2 – the implementation of AI can provide transformative benefits to organisations across a wide range of areas, such as enhanced decision-making, innovation, risk management and improved customer experience, among others3. To capitalise on this opportunity, the M&G (Lux) Global Artificial Intelligence Fund will run a portfolio of 50-70 actively selected companies where AI is emerging as a potential driver to long-term revenue growth or profit margin expansion, identifying opportunities in the following three categories4:
- AI Enablers (companies supplying the technology necessary to create AI solutions);
- AI Providers (companies offering AI solutions to customers);
- AI Beneficiaries (companies who will use AI to improve products, services and processes).
The fund, co-manged by Jeffrey Lin and Thomas Lee from M&G’s Thematic Technology Equity Investment team, launches with an initial £80 million investment from M&G, and aims to provide a higher total return (through a combination of capital growth and income) than the MSCI ACWI Index over any five-year period5. Classified as Article 8 under SFDR, the fund applies exclusions related to thermal coal and controversial weapons, and also exercises revenue limits on investments associated with specific social and environmental sectors6.
Fabiana Fedeli, CIO Equities, Multi-Asset and Sustainability at M&G Investments, says: ‘We are at the start of a multi-decade growth theme that has the potential to generate pervasive change in the broader economy and reshape the competitive landscape across industries. We see plenty of attractive AI-related investment opportunities, but as with all disruptive market forces, we expect an intense period of industry euphoria. Understanding where the strongest growth areas are will be the key to providing better outcomes for clients as they navigate this exciting market opportunity.’
Jeffrey Lin, Co-Manager of M&G (Lux) Global Artificial Intelligence Fund, adds: ‘The disruptive power of technological innovation derives from its potential to create a better or cheaper product capable of growing a company’s market share or, indeed, a whole new market. As active investors, we focus on identifying the intersection between technological innovation and its implementation in business processes. Our background as computer engineers, and our continued tenure in the investment industry, equip us with the broad-based experience and expertise necessary to understand what it takes for a business to be very successful in this space.’
The strategy is available as an OEIC fund for UK-based investors – M&G Global AI Themes Fund – and as a SICAV fund for investors based outside the UK – M&G (Lux) Global Artificial Intelligence Fund. Both funds follow the same investment strategy and are managed by the same team.
- Ends -
This is a marketing communication. Please refer to the prospectus and to the KID before making any final investment decisions.
The value and income from the fund’s assets will go down as well as up. This will cause the value of your investment to fall as well as rise and you may get back less than you originally invested. There is no guarantee that the fund will achieve its objective and you may get back less than you originally invested. The views expressed in this document should not be taken as a recommendation, advice or forecast. We are unable to give financial advice. If you are unsure about the suitability of your investment, speak to your financial adviser.
The fund can be exposed to different currencies. Movements in currency exchange rates may adversely affect the value of your investment.
The fund has a large exposure to the Information Technology sector. As a result, the fund may be more volatile and vulnerable to market sentiment and risks specific to this sector than funds that are well diversified across multiple sectors.
Please note, investing in this fund means acquiring units or shares in a fund, and not in a given underlying asset such as building or shares of a company, as these are only the underlying assets owned by the fund.
The Fund is actively managed and has the MSCI ACWI Index as its benchmark.
The fund promotes Environmental/Social (E/S) characteristics and while it does not have as its objective a sustainable investment, it will have a minimum proportion of 20% of sustainable investments.
The Fund’s sustainability information is available to investors on the Fund page of the M&G website here: https://www.mandg.com/investments/professional-investor/en-lu/funds/mg-lux-global-artificial-intelligence-fund/lu2694841102
For additional information, please refer to our glossary.
Notes to Editors
1 McKinsey, “The economic potential of generative AI: The next productivity frontier”, mckinsey.com, June 2023.
2 Trading Economics
3 Capgemini, “Harnessing the value of generative AI: Top use cases across industries”, July 2023.
4 Examples of AI Enablers are computational power, data, high speed data communications, and sensors. These include semiconductor firms that produce the processors and chips used to perform high-speed data; systems companies that supply networking equipment; and telecoms firms that provide bandwidth to the network edge from the data centre and vice versa.
AI Providers typically, but not exclusively, belong to the software industry, which are enhancing their products with AI.
AI Beneficiaries are typically found outside the IT sector and span the automotive, healthcare and industrial industries.
5 Net of the Ongoing Charges Figure. Target returns are not guaranteed.
6 Social sectors: tobacco, gambling, adult entertainment. Environmental sectors: unconventional oil & gas.
About Jeffrey Lin
Jeffrey joined M&G Investments in January 2023 as Head of Thematic Technology Equities. Previously, he worked for 16 years at TCW, where he was Co-Portfolio Manager of multiple thematic strategies including Global AI, Next Generation Mobility and Entertainment Technology, and was previously analyst covering Computer Hardware, Software, IT Services and the Automotive sector. Jeffrey also worked at Provident Investment Counsel, Vulcan Ventures and Montgomery Securities and, before entering the investment industry, he was a computer engineer at Ingram Micro and Compaq Computer.
Jeffrey holds a Bachelor of Science in Electrical Engineering and an MBA from the University of Southern California.
About Thomas Lee
Thomas joined M&G Investments in January 2023 as Deputy Head of Thematic Technology Equities. Prior to that, he spent more than eight years at TCW, where he was Co-Portfolio Manager of several thematic strategies, including Global AI, Next Generation Mobility and Entertainment Technology, and analyst, covering Semiconductors, Semi-cap equipment, Telecom Equipment and Services. Before TCW, Thomas worked as senior research analyst at Empire Capital, analyst at Goldman Sachs and research associate at UBS, and he started his career at Motorola as an engineer. Thomas holds a Bachelor of Science and a Master of Science in Electrical Engineering from the University of Illinois at Urbana-Champaign, and an MBA from the University of Chicago.
