Macroeconomic forecasting is a humbling job. We started the year with an expectation of at least 4 rate cuts from the Fed but by the middle of the second quarter, that expectation was significantly reduced to just 2 cuts (even 1 cut to some forecasters). Coming to the end of June, the consensus trended towards more easing again. Macroeconomic forecasting is hard, if not an impossible task, and that is why at our fund, the bottoms-up fundamentals approach helps us from being distracted by market noises.

For the first half of the year, the fund has performed over 20%. Still outpacing major market indices, the fund stayed focused to our main investment themes and for the long term. This is especially hard to do when the market’s narratives and the media constantly swing back and forth. Take the example of TSMC (our 3rd largest holding and one of our main return contributors in 2Q), in its 1Q report on April, the market slammed the company with such negativity, but we stood our ground and was well rewarded. Another example was our cyber security holdings (CRWD and ZS), over the month of April and May, they were also out of favour, but we saw opportunity (we bought more ZS in 2Q) and it paid off. The trend is our friend, but we have made friends with volatility too.

We are constantly looking for opportunities. A.I. brings disruption as well as opportunities. We look for businesses that are ready to leverage AI and have large addressable markets.

We would like to close by reiterating our excitement in today's investment landscape. Bryan Catanzaro, a key scientist in Nvidia postulated that we are at the dawn of the era of abundance. We are investing in companies laying the foundations for more prosperous and productive societies. There might be a lot of rethinking in many aspects of our lives in the next decade as we move toward the age of abundance. What a world!

31 Jun 2024