AltFi Insight: Fintech fund smashes the competition in 2019

The Robeco Fintech Fund is less than two years old but has been on a tear in performance terms more than doubling the return of the broader market.

An open-ended fund specialising in investing in listed companies benefitting from disruption to finance and the broader fintech revolution is one of the best performing funds in 2019.

The Robeco Global Fintech Equities fund, which is available to retail and intermediary investors alike, launched at the end of 2017 and has attracted assets of €959.1m. It is co-managed by Patrick Lemmens and Jeroen van Oerle.

In the first half of 2019, the fund returned 30.09 per cent, the fifth-best return in the Investment Association's universe of about 4,000 funds.  By comparison, the fund’s benchmark index the MSCI AC World Index returned 17.78 per cent over the same period as shown by the chart below.

Performance of fund net of fees vs index in H1 2019
 

Source: FE Analytics

The worst performing fund over the same period was the LF Woodford Equity Income Fund which lost 12.33 per cent and is now gated.

The Robeco Global Fintech Equities fund does not invest in the unlisted firms that most quickly spring to mind when mentioning fintech, but rather has a strategy to hold larger, liquid stocks benefiting from the trend to greater digitisation in financial services as well as listed challengers and service providers. 

For example, its largest holding is Visa followed by Paypal. It also has Fidelity National Info Services (founded in 1968), Euronet Worldwide, Rakuten, Evetec TCS Group, Akamai Technologies, Temenos and Lending Tree, one of the youngest firms in the portfolio.

The fund’s managers split their holdings into three ‘buckets’: Winners, Challengers and Enablers. Winnners are global leaders in existing markets positioned to benefit he fintech trend, enablers are the service providers that help facilitate the trend and challengers are new (ish) firms that have made their way into the public equities markets.

In a recent note to investors the fund’s managers pointed to very strong secular growth trends they are expected to drive the fintech industry in the coming years, ranging from artificial intelligence and big data to core system replacement and a continued shift to electronic forms of payment and trading.  In addition, they say M&A in fintech continues apace. 

“Scale is the name of the game in payments and that mantra is global. Also, we see ongoing CAPEX increases by large financial institutions. The realization of required investments into technology start to resonate sector-wide. Finally, one of our key beliefs is that Asia will become the fintech centre of the world in terms of the latest technologies and highest adoption levels,” they said.

Since launch the fund is up 43.39 per cent, its benchmark index meanwhile is up 17.81 per cent.