Australia’s leading technology investors are adjusting their portfolios amidst an artificial intelligence-driven sell-off that has eroded market returns. Concerns that AI could replicate the services of software companies at a lower cost intensified after Anthropic released AI tools aimed at automating various work tasks. The sell-off has impacted companies perceived to be threatened by AI, including real estate portals, data providers, and consulting firms.
Hyperion’s $3.1 billion Global Growth Companies Fund has been significantly affected, falling nearly 19 per cent in the three months to January. Hyperion is an investment management firm, with a focus on high-quality growth companies. The firm said it has lowered exposure to software companies to reflect increased uncertainty about long-term returns, only retaining businesses that can defend against large language models.
Other funds have also been impacted. Joseph Ziller’s Global Fund sank 11.5 per cent in January, Lakehouse’s Global Growth Fund was down 13.3 per cent, and Franklin Templeton’s Global Growth Fund slid 6.5 per cent. Doug Tynan’s GCQ fund also experienced losses, with software, information services, and internet stocks comprising a large portion of its $1.2 billion global equity fund.
Despite the widespread sell-off, some fund managers remain optimistic. Tynan stated that the portfolio’s fundamentals have not deteriorated and sees the sell-off as an opportunity to buy businesses at a discount. Aoris’s Stephen Arnold echoed this sentiment, noting that the underlying performance of its companies remained strong. Ophir Asset Management is taking a more cautious approach, selectively investing in software-as-a-service companies with strong cash flow.
