Ten Cap portfolio manager Jun Bei Liu has decreased the hedge fund’s allocation to the technology sector, opting for investments in mining companies. This strategic shift comes after a significant sell-off in growth stocks negatively impacted the fund’s returns. Ten Cap is a Sydney-based firm that manages investment portfolios. Its Alpha Plus Fund lagged the Australian sharemarket by 1.4 per cent in January.
The move follows a challenging period for Ten Cap, with the fund underperforming the S&P/ASX 200 Accumulation Index by 8.6 per cent over the past year. This underperformance has also affected its key three- and five-year performance metrics. While reducing its overall tech exposure, Ten Cap is maintaining positions in companies like Xero, Pro Medicus, REA Group, and TechnologyOne, believing these are less susceptible to disruption and could benefit from AI integration. Pro Medicus is a medical imaging software group.
In addition to increasing its stake in the resources sector, Ten Cap has also made adjustments within the consumer staples and gaming sectors. The fund divested its shares in Coles, favouring Woolworths due to a perceived improvement in risk-reward dynamics. Conversely, it reduced its holding in Aristocrat Leisure, reallocating the capital to Light & Wonder. Ten Cap believes valuations in the resources sector remain attractive, with a focus on copper and other base metals, holding positions in BHP, Rio Tinto, Sandfire Resources and South32.
Ten Cap also benefited from its holdings in uranium explorer NexGen Energy, gold producer Newmont and diversified miner South32. The firm is also optimistic that the market’s focus will return to corporate earnings as the ASX reporting season progresses. Liu notes the recent sell-off in the technology sector has created opportunities, stating that some growth businesses have been oversold, presenting rare investment opportunities.
