An overseas star fund manager who outperformed 97% of his peers in performance this year shared his vision of next year's "investment experience" this week. One of the biggest highlights in his outlook for next year's market is that he is no longer optimistic about technology stocks, as he predicts that this year's surge in the industry is not expected to happen again in 2024
Trent Loi, portfolio manager of AMP Specialist International Share Fund in Sydney, said that although the moderate overallocation of US technology giants has benefited the fund greatly in 2023, the profit growth prospects of these tech giants have been fully priced.
According to industry compiled data, this fund, with a scale of 2.6 billion Australian dollars (approximately 1.7 billion US dollars), has climbed 18% this year, outperforming 97% of its peers.
Loi said that for technology stocks, the best situation for 2024 should only be on par. "They (technology stocks) should no longer have such a significant driving effect on next year's returns, which may also indicate a market rotation."
Although the Federal Reserve's policy stance has recently shifted towards easing, this has not changed its expectations. Loi pointed out that for large technology stocks, optimism about potential interest rate cuts has already been priced, and further expansion of gains requires significant changes in the company's fundamentals.
The fund has been involved in all seven major US stocks in its holdings this year, and these stocks have indeed performed far ahead in the market. Facebook's parent company Meta has risen by 187% so far this year, making it the fund's largest increase in holdings. It also holds a large amount of stocks in Microsoft and Nvidia.
Betting on energy stocks next year
Loi stated that the fund currently does not intend to reduce its position in technology stocks, but is betting that energy stocks will become the winner next year.
Loi believes that energy stocks are currently expected to outperform the market, and oil prices will rise due to the lack of planned pipeline projects and extensive trading activities. The fund holds stocks of Inpex Corp, Total, ExxonMobil, and Shell.
In recent months, concerns about oversupply have seriously impacted the oil market, with oil prices falling all the way since September. Even though OPEC and its allies have recently taken measures to extend and deepen production cuts, they have not been able to prevent the decline of this world's most important commodity, and investors are skeptical about whether OPEC+can successfully tighten the market.
However, Loi pointed out that despite this, the oil market may still face supply constraints in the future. Concerns about the environment have made it difficult to develop new energy projects, and there will be no significant oil pipelines online in the next decade, which may put pressure on inventory and drive up oil prices.
Still optimistic about weight loss pills
The fund is also optimistic about healthcare stocks and expects weight loss drug concept stocks to further rebound. He holds stocks in Novo Nordisk and Lilly.
Loi said, "Many pharmaceutical companies' valuations are still reasonable, and their profit prospects are very stable."
Coincidentally, the latest report released by Goldman Sachs also predicts that although Lilly's stock has surged by over 50% this year, there is still a possibility of a significant increase in the future.
Goldman Sachs stated that as the GLP-1 weight loss drug craze continues, by 2028, as many as 68 million Americans, approximately 20% of the US population, may take the weight loss drug. This may drive the revenue of GLP-1 drugs to soar to $400 billion.