NEWS
26 Jun 2025 - Performance Report: Insync Global Capital Aware Fund
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26 Jun 2025 - Beginning of the End or End of the Beginning?
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Beginning of the End or End of the Beginning? Alphinity Investment Management June 2025 |
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It's hard to imagine a world where Apple and Google (Alphabet) aren't dominant. These two tech giants have been at the centre of our digital lives for nearly two decades - Apple through its control of the smartphone ecosystem, and Google through its command of online search. But history reminds us that no company, no matter how dominant, is completely immune to disruption. The rise of artificial intelligence (AI) could pose the greatest threat these businesses have ever faced and opens a plausible path for this dominance to be challenged.  Google's Grip on Search Is Under Threat Google has long enjoyed an unshakable position in internet search, capturing more than 90% of global market share. But this near monopoly is no longer as impregnable as it once was. The emergence of large language models (LLMs) like OpenAI's ChatGPT and newer players like Perplexity introduces a very different way to access information - one that doesn't rely on the traditional "10 blue links" model of search. These AI systems offer more direct, conversational answers. They aggregate information across sources and present it in a more human and contextual way. For many types of queries, particularly research, how-tos, and summaries, they can be faster and more useful than Google. And these new LLM's are beginning to take their conversational interface into commercial search, the very core of Google's business. If users increasingly turn to LLMs for commercial queries, ad revenue will begin to migrate with this shift in engagement. This is important as Search advertising revenue is circa 57% of Google total revenue, and given the high margin attached to it, this would translate into > 80% of Google profitability. While Youtube, Cloud and Waymo are quality and growing businesses, the key to the future value of Google remains inextricably tied to Search and this is currently under threat. Google is investing heavily in AI through its Gemini platform, but the challenge it faces is not just technological - it's structural. Shifting its business to meet the new paradigm of Ai summaries could cannibalise its existing ad revenues. In short, Google has to disrupt itself while fending off nimbler rivals that don't carry the same baggage - the ultimate "innovators dilemma". To date these moves have been tentative leaving the door ajar for competitive displacement.  Apple's Ecosystem Fortress Is Showing Cracks Apple's dominance has long rested on two powerful pillars: its tightly integrated hardware led by the iPhone (which still accounts for more than 50% of revenue), and its faster growing, high-margin services business. Together, they form one of the most valuable consumer ecosystems ever built. But both sides of this ecosystem are now facing meaningful threats from technological disruption, compounded by regulatory pressure. On the technology front, Apple looks to be slipping behind in the race to define the next user interface. As AI becomes central to how we interact with devices - through voice agents and intelligent assistants - Apple's core interface in Siri is lagging badly. While rivals like Open Ai, Meta and Perplexity are rapidly advancing conversational AI, Apple's Siri updates are continually delayed, with the next major upgrade now not reportedly arriving until 2027. If new device platforms emerge that are built around AI-first interaction, Apple's dominance in hardware could be challenged. We are already seeing a potential alternate device state emerge in glasses, with Meta in development with Essilor Luxottica and Google announcing a deal with Warby Parker. The acquisition by Open Ai of Apple alumni Jony Ive's Ai hardware startup "io" is another strand in the intensifying Ai device competitive landscape. At the same time, Apple's services business is under legal scrutiny. Regulators in the U.S. are seeking to block its multibillion-dollar search deal with Google; a move that could curtail a major source of annual revenue and earnings. Court documents have put this payment at around $25bnpa or 6% of revenue. Meanwhile, pressure is mounting globally to force Apple to open its App Store to alternative payment systems and third-party downloads, weakening its ability to charge developers a 30% commission (often called the "Apple tax"). Coupled together we have approx. $55bn of high margin Apple Services revenue under threat from a tightening regulatory landscape. Together, these risks suggest that Apple's once-unshakeable ecosystem is increasingly vulnerable. Just as Apple rose to power during the mobile revolution, the shift toward AI at a time of greater regulatory interventions could open the door for new competitors to disrupt both its hardware and services businesses. Lessons from History While it is difficult to imagine a world where Google and Apple are not dominant, the technology sector is littered with examples of once-dominant firms that failed to adapt to technology platform shifts:
The birth of the internet gave rise to today's giants. The birth of AI may, in turn, create the conditions for new leaders to emerge - or for today's leaders to stumble.  What This Means for Investors As an investor it's tempting to stick with the familiar and extrapolate what we currently see. Apple and Google have delivered years of strong returns and are still generating exorbitant levels of free cash. But dominance in tech is rarely permanent. Disruption often starts with tiny cracks and by the time it is more obvious, the market has already repriced the winners and losers. Now this doesn't mean it is definitely "over" for these two giants. They have faced substantial risks before and managed to morph their business to adapt to the prevailing conditions. And there are competing, more positive narratives that the breadth of Google services and depth of Ai skills can see it emerge as an Ai winner while Apple can position as the "on-ramp" for consumer Ai engagement. But for the first time in a while the wind seems to be more in these companies' faces, and while still uncertain, a path to a substantial weakening of the Apple and Google businesses is beginning to open-up. As such a more cautious view on these companies is warranted, and it means staying highly attuned to shifts in user behaviour, the adoption of AI tools, and focusing on where the innovation is really happening. The companies that succeed in the AI era may look very different from those that have succeeded in the internet era and the potential weakening of Apple and Google could create the space for an Ai native trillion-dollar company to emerge. |
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Funds operated by this manager: Alphinity Australian Share Fund , Alphinity Concentrated Australian Share Fund , Alphinity Sustainable Share Fund , Alphinity Global Equity Fund , Alphinity Global Sustainable Equity Fund This material has been prepared by Alphinity Investment Management ABN 12 140 833 709 AFSL 356 895 (Alphinity). It is general information only and is not intended to provide you with financial advice or take into account your objectives, financial situation or needs. To the extent permitted by law, no liability is accepted for any loss or damage as a result of any reliance on this information. Any projections are based on assumptions which we believe are reasonable but are subject to change and should not be relied upon. Past performance is not a reliable indicator of future performance. Neither any particular rate of return nor capital invested are guaranteed. |
25 Jun 2025 - The return you see, the risk you don't
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The return you see, the risk you don't Canopy Investors June 2025 It's not whether you're right or wrong, but how much money you make when you're right and how much you lose when you're wrong.George Soros (quoted by Stan Druckenmiller), The New Market Wizards: Conversations with America's Top Traders, 1994
Investing is the pursuit of a return in the face of an uncertain future. While every opportunity involves risk, the concept itself is often not well understood. What is, and isn't, risk?Historically, risk has often been proxied by share price volatility, likely because volatility is easily measured and readily observable. However, volatility is a statistical concept, measured on a backward-looking basis and often over a short time frame, whereas risk is fundamental and forward-looking. Volatile stocks are not necessarily risky if they can be expected to significantly appreciate in value over time. As Morgan Housel has previously noted, "Volatility is the price of admission. The prize inside [is] superior long-term returns. You have to pay the price to get the returns." Risk is also sometimes conflated with uncertainty. While related, they are not the same. All investments we make involve some degree of uncertainty--future product launches, management execution, competitive dynamics. But uncertainty is not risky if it is adequately reflected in the share price. Even less helpful is the view that risk equals deviation from a benchmark. While tracking error may increase an investment manager's career risk, it has little to do with investment risk. Chasing momentum stocks can seem smart as prices rise -- particularly when benchmarks are similarly skewed -- but this can be dangerous. Avoiding the easy money rollercoaster may increase tracking error while actually lowering risk. At Canopy, we define risk as the likelihood of permanent capital loss. That risk is shaped by two factors: the price we pay for an investment, and the future performance of the underlying business. Alternative historiesA key implication of the above is that while investment returns are readily observable, the risk taken to achieve them is not. In Fooled by Randomness (2001), Taleb introduces the concept of 'alternative histories' - the idea that what actually happened (in this context, a realised return) is only one sample path among many that could have occurred. He argues that our tendency to focus on realised success leads us to underestimate luck and overestimate skill, and by extension, to ignore risk. Figure 1 illustrates the path of alternative histories to a realised return outcome.
This dynamic likely explains much of the well-documented lack of persistence in investment manager returns: in strongly rising markets, the highest returns are often achieved by those who take the most risk, which may unravel when conditions reverse. Gottesman and Morey (2021) support this, showing that funds with high upside capture ratios (outperformance during rising markets) also tend to have high downside capture ratios (underperformance in down-markets). Howard Marks summarises the concept well in his 2015 memo 'Risk Revisited Again': "The celebrated investor is one whose actions yielded good results. Was she lucky or good? How much risk did she take? Since it's risk-adjusted return that counts, can we tell whether her return was more than commensurate with the risks borne or less than commensurate? I'm confident that the answers lie in skilled, subjective judgments, not highly precise but largely irrelevant ratios of return to volatility."
Our approachWith that context, our risk management process is designed to minimise the risk of permanent capital loss, while maintaining our exposure to listed companies:
While we have access to factor and volatility-based risk models, as noted above, they tend to measure backward-looking price movements rather than the probability of permanent capital impairment, and they are consequently less relevant to our risk framework. |
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Funds operated by this manager: |
24 Jun 2025 - Why invest in infrastructure
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Why invest in infrastructure Magellan Asset Management May 2025 |
What is infrastructure?Investing in infrastructure is about investing in the companies that provide essential services to society and that generate predictable long-term earnings. These assets include transportation, energy and utilities, communications and social infrastructure businesses. Why invest in Global Listed Infrastructure?Investing in global listed infrastructure offers unique advantages for investors. With over 350 infrastructure and utility companies available on global stock markets, these investments have the potential to provide reliable cash generation, inflation protection, and defensiveness in declining markets.
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Funds operated by this manager: Magellan Global Fund (Open Class Units) ASX:MGOC , Magellan Infrastructure Fund , Magellan Global Opportunities Fund No.2 (Class A) , Magellan Infrastructure Fund (Unhedged) , Magellan Global Fund (Hedged) , Magellan Core Infrastructure Fund , Magellan Global Opportunities Fund
Important Information: Copyright 2025 All rights reserved. Units in the funds referred to in this podcast are issued by Magellan Asset Management Limited ABN 31 120 593 946, AFS Licence No. 304 301 ('Magellan'). This material has been delivered to you by Magellan and has been prepared for general information purposes only and must not be construed as investment advice or as an investment recommendation. This material does not take into account your investment objectives, financial situation or particular needs. This material does not constitute an offer or inducement to engage in an investment activity nor does it form part of any offer documentation, offer or invitation to purchase, sell or subscribe for interests in any type of investment product or service. You should obtain and consider the relevant Product Disclosure Statement ('PDS') and Target Market Determination ('TMD') and consider obtaining professional investment advice tailored to your specific circumstances before making a decision about whether to acquire, or continue to hold, the relevant financial product. A copy of the relevant PDS and TMD relating to a Magellan financial product may be obtained by calling +61 2 9235 4888 or by visiting www.magellangroup.com.au. The opinions expressed in this material are as of the date of publication and are subject to change. The information and opinions contained in this material are not guaranteed as to accuracy or completeness. Past performance is not necessarily indicative of future results and no person guarantees the future performance of any financial product or service, the amount or timing of any return from it, that asset allocations will be met, that it will be able to implement its investment strategy or that its investment objectives will be achieved. This material may contain 'forward looking' statements and no guarantee is made that any forecasts or predictions made will materialise. No representation or warranty is made with respect to the accuracy or completeness of any of the information contained in this material. Magellan will not be responsible or liable for any losses arising from your use or reliance upon any part of the information contained in this material. This material and the information contained within it may not be reproduced, or disclosed, in whole or in part, without the prior written consent of Magellan. Further important information regarding this podcast can be found on the Insights page on our website, www.magellangroup.com.au. |
23 Jun 2025 - Performance Report: TAMIM Fund: Global High Conviction Unit Class
[Current Manager Report if available]
20 Jun 2025 - Hedge Clippings | 20 June 2025
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Hedge Clippings | 20 June 2025
Webinar How to get the most from Fundmonitors.com News | Insights Market Commentary | Glenmore Asset Management Investment Perspectives: Thinking about bonds.....and the local school play | Quay Global Investors May 2025 Performance News Bennelong Concentrated Australian Equities Fund 4D Global Infrastructure Fund (Unhedged) Bennelong Twenty20 Australian Equities Fund |
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20 Jun 2025 - Performance Report: Argonaut Natural Resources Fund
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20 Jun 2025 - China's big charge: EVs, oil and the renminbi
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China's big charge: EVs, oil and the renminb abrdn June 2025 Since 1945, the exchange of dollars and oil has been a bedrock of the world's financial system. Oil runs north through the Suez Canal and south via the Straits of Hormuz. Greenbacks flow in the opposite direction. Oil is the lifeblood of economies, and they can't operate without dollars. But the world is changing. China has achieved global leadership in manufacturing, but the renminbi (RNB) has failed to come close to the dollar by any measure. Yet, where its currency ambitions might have failed, China seems poised to take the lead in clean energy. In 2025, leading global battery maker Contemporary Amperex Technology (CATL) launched a car battery that charges in 10 minutes. This is far faster than traditional electric vehicle (EV) batteries. The technology that underpins this leap forward continues to spread, with energy storage systems increasingly supporting grids powered by renewable energy. In the next century, the global energy exchange could switch, with sodium and lithium ions flowing one way, and the RMB flowing the other. Batteries powering the futureChina dominates battery and energy storage systems, enabling its grid to manage a significant amount of renewable energy input, around 31% of total production. Next year, solar is forecast to overtake coal as China's leading energy source. In 2024, Asia commissioned 24.7-gigawatt (GW) capacity of BESS (battery energy storage systems), with China accounting for 95% of that storage. This compares North America's 14.2GW and Europe's 2.4GW (including the UK) [1]. Then there's China's vast fleet of EVs. China bought 11 million of the 17 million EVs sold last year, dwarfing sales in every other market. Chinese cars offer high quality at low cost, attracting consumers worldwide. Chinese EVs can be up to three times cheaper than US or European models. China has overtaken Japan and Germany as the world's leading car exporter (see Chart 1). Chinese EVs can be seen on the roads all over Asia, Latin America and increasingly in Europe.
Chart 1: China has become the world's largest car exporter
Stock to watch - CATLContemporary Amperex Technology Co (CATL) is the leading light of Chinese EVs and battery technology supremacy. Holding a commanding 38% market share across all battery types, the company innovates at a startling pace. CATL spearheads industry technological advancements across various dimensions. Before 2016, lithium iron phosphate (LFP) batteries dominated China's passenger EV market due to their lower barriers to entry and costs compared to nickel cobalt manganese (NCM) batteries. Most top battery producers focused on LFP technology, but CATL was quick to see the potential in high energy-density batteries. It invested significantly in NCM technology, while industry peers prioritised cost reduction. This bold approach has cemented CATL's position as the global leader in the sector. Earlier this year, China's BYD Auto unveiled the super-fast charging 10c battery, which takes just 10 minutes to charge for a 400-kilometer (km) range. In response, CATL unveiled the Gen 2 Shenxing battery, offering the same charge but within extended 520km range. Last year, we visited one of CATL's new Chinese factories. The engineering prowess was impressive with much of the process automated, and batteries seamlessly floating along the production line. CATL recently listed on the Hong Kong Exchange, with the shares rising by 16% on the first day and giving the group a market capitalisation of USD166bn. Despite playing a pivotal role in the global transformation in energy and transportation, CATL still offers value and an attractive yield. The stock trades at 15x price/earnings and is expected to grow by 20% this year. With strong fundamentals, we think it can compound at 15% annually, while paying out 50% of its profits and offering a 2.8% yield. The future of EV batteries has arrived [2]. |
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Funds operated by this manager: abrdn Sustainable Asian Opportunities Fund , abrdn Emerging Opportunities Fund , abrdn Sustainable International Equities Fund , abrdn International Equity Fund , abrdn Multi-Asset Real Return Fund , abrdn Multi-Asset Income Fund , abrdn Global Corporate Bond Fund (Class A) |
19 Jun 2025 - Performance Report: Canopy Global Small & Mid Cap Fund
[Current Manager Report if available]
19 Jun 2025 - Performance Report: Cyan C3G Fund
[Current Manager Report if available]
