22 January 2024 – M&G Investments today announces the launch of the M&G Global AI Themes Fund (the Fund)1 – 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 efficiencies2 – figures similar to the entire 2022 GDP of countries such as Japan ($4.2TN), Germany ($4TN) or the UK ($3TN)3 – 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 others4. To capitalise on this opportunity, the M&G Global AI Themes 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 categories5:
- 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 £20 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 period6. The fund applies exclusions related to thermal coal and controversial weapons, and also exercises revenue limits on investments associated with specific social and environmental sectors7.
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 all 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 Global AI Themes 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.