Hyperion Asset Management, after a decade of solid returns, is repositioning its investments in anticipation of a significant economic shift. The Brisbane-based money manager believes the world is entering a new industrial revolution driven by artificial intelligence and robotics, moving away from a labour-driven economy. Hyperion, which manages $15 billion, correctly predicted the low-growth, low-interest rate environment that followed the 2009 global financial crisis. Hyperion Asset Management is an Australian fund manager. The company manages investments for individuals, superannuation funds, charities, and institutional investors.
Chief Investment Officer Mark Arnold and Deputy Jason Orthman stated in a client letter that this ‘paradigm shift’ will lead to higher productivity, growth, and lower inflation. They are focusing on companies involved in AI hardware, cloud services, autonomous vehicles, humanoid robots, and large language models. This strategic shift comes after a period of underperformance in Hyperion’s strategies, including its Small Growth Companies Fund, Australian Growth Companies Fund, and Global Growth Fund, which lagged their benchmarks due to market concerns about AI disrupting traditional software companies.
Hyperion has reduced its exposure to traditional software companies, citing decreased barriers to entry and the potential displacement of human labour by AI. This decision followed announcements of workforce reductions at companies like Afterpay owner Block and WiseTech Global. The remaining software companies in Hyperion’s portfolio are those with mission-critical systems, limited competition, and proprietary data.
Despite investor scepticism about the returns on AI investments by hyperscalers like Amazon and Microsoft, Hyperion believes the capital expenditure on AI may be insufficient. The firm is confident in its current portfolio positioning, backing both the disruptors and beneficiaries of AI, ensuring they are well-placed to recover from recent underperformance and thrive in the coming decade.
