Multi-asset investment company Saxo Bank announces that its equity theme baskets will undergo a yearly review in January and some of the baskets will likely see changes.
Saxo still has the robotics & automation theme in the pipeline, but it has proved to be more difficult to isolate in terms of pure exposure and risk drivers, but Saxo expects it to be published in 2022.
In light of the ESG trend, Saxo is planning a Women leadership basket which will focus on companies with a share of women in the leadership and board of directors. This basket is in the pipeline to provide investors with a set of companies that diverges significantly on the gender leadership issue and thus represent a change in society.
The energy crisis centered around supplies of natural gas has evolved into a fertilizer production crisis with soaring prices which will impact food prices next year. Saxo will launch a food basket which will consists of vertical farming, animal producers, seeds producers, sugar and coffee producers and distributors, farming equipment. This basket will have some overlap with the commodity basket but will be much more narrow.
In 2021 the electric vehicles industry matured a lot of more pure EV producers became publicly listed including charging station providers. This means that Saxo will expand the battery basket to include EV-makers and charging stations which will make this theme basket much better. The criteria for traditional carmakers to be added to this basket is to have more than 50% of revenue coming from battery electric vehicles.
Saxo is considering as part of this change to pull out electric vehicles from the green transformation basket and rename that to renewable energy. The potentially updated renewable energy basket will focus on solar, wind, hydrogen, hydro, bioplastic, and copper.
Let’s recall that in January Saxo launched its new equity research framework centered around equity theme baskets. It started with its ommodity basket comprising of agriculture, energy, chemicals, and metals and mining companies. Saxo’s premise has from the start been that the baskets should represent pure exposure to the theme, less covered by a well-designed ETF, represent a long-term trend, and become Saxo’s lens to understand the underlying dynamics in the equity market. classifications or country indices by MSCI Inc.
Regarding the performance of its equity theme baskets in 2021, Saxo’s Head of Equity Strategy Peter Garnry comments:
“This year has been very exciting with incredible divergence inside the equity market. At the bottom themes such as Gaming, Bubble, and E-commerce stocks are down 20%, 25% and 30% respectively as these stocks have been hit by lower revenue expectations and higher interest rates this year with weakness likely to continue next year as long-term interest rates will be forced close some of the gap to inflation.
The three best performing themes this year, Crypto & Blockchain (+62%), Logistics (+36%) , and Semiconductors (+31%), are quite telling of the year we have been through”.
