ASX-listed asset manager GQG Partners, overseeing approximately $213 billion in funds, faces scrutiny following a significant strategy shift by its chief investment officer, Rajiv Jain. The firm specialises in managing global and emerging markets equities for institutional and wholesale clients. Jain, previously a vocal sceptic of AI stocks, recently pivoted to a bullish stance. This move, however, proved ill-timed, sending GQG’s $US11.9 billion US equity fund tumbling by roughly 10 per cent last month, significantly underperforming the largely flat MSCI World Index.
Jain had earlier dismissed the AI enthusiasm as “the dot com boom on steroids,” a position that reportedly impacted the firm’s performance. As the tech-heavy Nasdaq 100 continued its ascent, he rotated back into the technology sector in July. This decision unfortunately coincided with investors beginning to divest from AI-related stocks. The poor timing has eroded confidence, contributing to GQG’s shares trading at an all-time low of 88¢ on Monday. Despite the outcome, Jain maintains his conviction, stating there is “nothing to regret” as “the data is so strong” for tech. By late September, technology stocks, including Nvidia, Apple, Microsoft, Alphabet, and Amazon, comprised over half of GQG’s flagship Global Equity Fund.
While the initial re-positioning showed positive returns in the September quarter, momentum reversed sharply in October. Broader concerns over the AI boom’s cost and financing led to a tech sell-off and a Nasdaq 100 correction. This recent performance compounds challenges for GQG, with investors pulling $US2.3 billion in September, bringing calendar year outflows to $US26.2 billion. Total funds under management have declined by $US23.7 billion from their February peak to $US149.2 billion by September’s end. Morningstar analyst Shaun Ler noted GQG’s transition from an “anti-AI proxy” to an “AI/tech proxy,” which has hurt sentiment. Jain, however, refutes the “AI proxy” label, asserting that GQG’s strategy involves constant pivoting.
