April 15, 2024

Top AI trusts looking to win big in 2024 revealed

Let’s be honest, artificial intelligence was everywhere in 2023.

Chatbots were created for practically everything, OpenAI boss Sam Altman was ousted, Microsoft joined the party with billion-dollar investments, ChatGPT 4 came out, Sam Altman was reinstated, and the entire tech industry landscape change.

And as long as a revolutionary new development doesn’t usurp the AI ​​crown, it’s likely to hold on into 2024, meaning investors will want to get involved if they haven’t already.

OpenAI and Microsoft boss Sam Altman and Satya Nadella Source: Wired

How to invest?

Unless you’re Proactive’s Billy Farrington and have the foresight to choose a 236% year-to-date rise as your stock pick for the year, it can be difficult for investors to navigate through the horde of investment options that are presented as the next ones. King of AI.

Billy’s top choice was Nvidia, which was able to establish itself as a clear market leader in the chip manufacturing industry after OpenAI used its products to train ChatGPT.

However, rivals Advanced Micro Devices (AMD) and Taiwan Semiconductor Manufacturing Company (TSMC) are seeking to revolutionize the market.

Source: Computing World

Source: Computing World

The first-mover advantage was certainly in full effect in 2023, but next year will it become a first-mover disadvantage?

“Perhaps a worrying sign was NVIDIA’s third-quarter results, in which the chip company massively beat analyst expectations and raised its fourth-quarter guidance, only to see its stock price fall,” Laith said. Khalaf, head of investment analysis at AJ Bell.

“It seems as if the market wants more miraculous stunts to provoke applause. Certainly, the high valuations given to the technology sector leave little room for error in operational performance and, consequently, any errors could be harshly punished.”

AI Trusts

Just like choosing a movie on Netflix, sometimes too many options can be more of a hindrance than a benefit.

That can be the beauty of trusts: the trustees who manage them do the hard work, and shares of the investments can often be bought at a discount to net asset value.

Proactive, with the help of AIC and Morningstar, has analyzed the leading AI trusts to find out which ones performed best in 2023.

Manchester and London Trust

Manchester & London Investment Trust plc (LSE:MNL) rose nearly 63% in 2023 and did so without having a dollar’s worth of Meta, Amazon or Salesforce in its portfolio.

Despite the exclusion of some of the biggest players, it was still the most weighted for AI companies of all the trusts, with more than 65% of its share weighted to the industry.

The trust’s shares offer more than an 8% discount to their estimated net asset value (NAV) of around 610 pence per share, according to analysts at Hargreaves Lansdown.

The main holdings of the trust are:

M+L offers a dividend yield of 2.59%, which is distributed semi-annually.

Polar Capital Technology Trust

The trust was opened in December 1996 and listed two months later, and shares of the investment collection have risen more than 2,300% since then.

However, it is the more than 46% increase in 2023 that has caught the attention of technology investors.

Polar Capital Technology Trust PLC (LSE:PCT) shares can be purchased at over 11% discount, with a total asset value of over £3.5bn.

With a 43% weighting towards top AI stocks, the trust owns all the current big players and, like most trusts on this list, is heavily weighted towards Microsoft.

Its five main holdings are:

Allianz Technology Trust

Closely followed in third place is Allianz Technology Trust, a 28-year-old British investment trust that expects an increase of nearly 44% in 2023.

It has a weighting of over 57% for AI companies, but focuses on the tech giants, particularly the magnificent seven.

Allianz Technology Trust PLC’s (LSE:ATT) biggest AI omission is Dutch semiconductor company ASML, with the trust focusing on Nvidia and TSMC.

Available at a 12.4% discount to their net asset value, the shares are trading at around 300p, but do not distribute dividends.

Its largest holdings are:

JPMorgan American Trust

The fact that a US-focused trust comes in fourth place is testament to the importance and strength of Silicon Valley and the dominant US technology industry.

It is again the performance of the magnificent seven that has helped it achieve a jump of more than 23% since the beginning of the year.

Unsurprisingly, trust is not in TSMC, ASML or the German software specialists SAP, but also in Salesforce, Intel and Adobe.

The shares are trading at a 1.5% discount and have assets worth £1.6bn.

Its main holdings are:

BlackRock Greater Europe Investment Trust

A list of top trusts wouldn’t work without the world’s largest asset manager finding its place.

However, BlackRock’s winning confidence highlights that while the United States remains the leader in the AI ​​game, Europe is close behind.

The stock is up more than 17% in 2023, and while it had to rely on some non-tech stocks like Novo Nordisk (NYSE:NVO) and LVMH, it achieved these gains without any of the magnificent seven and is the only trust without Microsoft. at number one.

The shares offer a discount of 6.4% and distribute a semi-annual dividend yield of 1.2%.

Its main technology holdings include:

The same in 2024?

Whether these advances can be repeated in 2024 will likely depend on whether a technology company can disrupt the path of leaders like Nvidia and Microsoft.

Source: Elegant Themes

Source: Elegant Themes

An ever-changing landscape means that within days a new leader in AI could come to the fore.

For retail investors, it can be difficult to keep track of every single startup, let alone extract value from smaller competitors.

An easy and safe option, as highlighted by the trusts mentioned above, is to acquire shares of major technology companies and hope that they continue on the same path in 2023.

However, to really facilitate the efforts, it is clear that technology trusts like those mentioned are the best options, with the fund managers (or their AI substitutes) doing the hard work, while you can sit back and wait for another increase in the 60% in 2024.

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