Heath Behncke, our Managing Director and Portfolio Manager was featured by Tony Featherstone, The Australian Financial Review in the article “How to Profit from Global Disruption”, 5th September, 2020. Below is an extract from the feature, the full article can be accessed here.
“Australian investors are massively underweight global innovation and disruption,” says Heath Behncke, co-founder of Holon Global Investments, a specialist asset manager in this trend. “If you live outside the US and China, where most of the action in disruption is happening, you tend to be a user of disruptive new technologies rather than an investor in them.”
Behncke believes most managed funds are not set up to invest in innovation. “Typically, a managed fund has a certain investment style (eg, growth versus value) and their methodologies don’t value disruptive companies. When you change your mindset from ‘local linear’ to ‘global exponential’, you look differently at the valuations of Xero, Afterpay and other disruptors.”
Xero, held in the new Holon Photon Fund, shows the potential, says Behncke. “The sharemarket continues to misprice Xero because it does not fully understand the long-term value being created as more people globally use its accounting software. Investors need to look a decade out with Xero and other disruptors, rather than value them on next year’s revenue or earnings.”
Behncke is bullish on fintech. Photon’s largest exposures include Visa, Mastercard, Alibaba (for its payment-services division) and Afterpay. “The world is going cashless in a hurry as industry digitises. COVID-19 is accelerating that trend. Blockchain (distributed ledger technology) will take that conversation in new directions as it decentralises personal data storage.”
Holon is launching a global fund that will hold Bitcoin, and is part of an Australian group championing the creation of Libra, a new global cryptocurrency. “Having Bitcoin in a disruption portfolio is akin to having gold as a defensive holding in a traditional portfolio. A global digital reserve currency will emerge in the next 10 years, possibly led by China at this stage.”
The Holon Photon Fund is one of a handful of specialist innovation-disruption funds in Australia that is open to retail investors. Unlike funds that invest only in listed tech companies, disruption funds can invest across industries. As technology blurs sector boundaries – for example, is Afterpay a financial services firm or a tech company? – broader definitions are needed.