Entering 2024, the information technology sector takes centre stage, propelled to new heights by the global surge in big-tech fervour. In January, the communications service sector, specialising in technological solutions, led the US stock market with a 4.4% gain, surpassing the S&P 500 by 2.8%.
While these stocks may be enticing, our primary focus is on ensuring sustainability amidst the dynamic transformations in the tech industry. We are delighted to introduce Quantifeed’s Portfolio of the Month, shedding light on US big data opportunities.
The US market has a robust history in big data technology, gaining renewed interest with the expansion of digital solutions in sectors such as banking, healthcare, and telecom/media. The big data analytics market is projected to grow at a remarkable 12% CAGR until 2030. Notably, Microsoft, a significant holding in our portfolio, has shown substantial growth, increasing by 57% in the past year and consistently driving market expansion.
Selection methodology:
Our methodology constructs a universe of stocks related to the robotics theme, with at least 20% of their revenues originating from the big data theme. Our inclusion criteria involve selecting companies that actively contribute to the collection, organisation, and analysis of extensive datasets.
We consider companies with a market capitalisation exceeding US$50 million and daily liquidity surpassing US$5 million. In alignment with the winning trend, stocks displaying a negative change in the majority of analysts’ outlooks will be filtered out. Additionally, we will ensure that each stock is covered by at least 6 equity analysts with recommendation ratings. From this pool, up to thirty stocks will be selected based on their market capitalisation.
The strategy employs an equally weighted approach, emphasising smaller-cap stocks for potential higher returns. Since 2014, the strategy has yielded an alpha gain of over 165% compared to the S&P 500 as of January. Amidst the technology stock hype, the strategy has outperformed the S&P 500 by approximately 4.4% year-to-date.
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