The answer is clear: Both. The volatility of broad technology indices such as the Nasdaq 100 or MSCI World IT is already a few percentage points higher than that of MSCI World. We don't consciously look for stocks with high volatility, but it is a parameter that we accept as part of our stock selection. We move heavily in the market capitalisation range between 3 billion and 100 billion dollars because this is where we can generate the highest alpha. There are many unprofitable tech stocks in this universe, where cash flows are still far in the future. These long-duration assets have a high interest rate sensitivity, which creates additional volatility in the portfolio.

Yes, this is part of the concept – to be able to buy the securities where we have the highest alpha expectations, and can achieve the highest performance compared to broad indices. We learned many lessons from 2022 (when the fund had to absorb high losses – editor's note) and optimised the portfolio in many areas, making it more robust and less volatile. In 2021/22, the volatility of our Bit Global Technology Leaders fund was 15 points higher than that of the MSCI World IT. This difference has now shrunk to five points.

We don't necessarily see ourselves in this peer group. There are market participants who focus on disruptive technologies, and argue that value investing approaches are not appropriate in this context. That is not our pitch. We see ourselves as value investors with a structured, data-driven approach. Another difference to managers like Cathie Woods is that we are much more active, and see ourselves more as true portfolio managers.

We look at a lot of parameters which, taken as a whole, give us a good picture of whether a company is valued inexpensively or expensively. Learning from 2022, we have developed our software tool for this purpose, a kind of automated monitoring for valuation discipline. Our software continuously analyses stocks for valuation parameters and signals to us when companies appear expensive. In addition to using alternative data, this system helps us with timing, adjusting weightings or selling positions completely when valuations become unattractive compared to other stocks. This allows us to rebalance our portfolio more frequently. In my view, these are the biggest differences, which have also been reflected in performance in recent years.

One stock position that we have greatly reduced in recent weeks, as an example of our valuation discipline, is Nubank. This is a digital bank from Brazil. This company was one of the top positions in our funds for several quarters. Although growth remains stable, the pace has slowed, and additional growth initiatives, such as the market entry in Mexico, will only have an impact in the long term. In view of a sharp rise in the share price and a less attractive valuation ratio, we gradually reduced the position and finally sold it completely.

The portfolio stock with the highest weighting at the moment is HelloFresh. The company started as a cooking box delivery service and achieved considerable growth, particularly during the Covid-19 pandemic. Demand then fell sharply, and competition intensified. After the company was trading at a market capitalisation of less than one billion euros, we made a significant investment with our funds in May 2024 at very good valuations.

First and foremost, despite the recent challenges, we see HelloFresh as a company with solid fundamentals and strong growth potential. In addition, HelloFresh is a company that is very well suited to our approach, due to its business model. We process a large amount of alternative data on a daily basis throughout our investment process. In this respect, the more traces companies leave behind on the internet, the better it is for our analyses. At HelloFresh, there is no brick-and-mortar retail; every point of contact with the customer takes place online. This means that we have good opportunities to gain deep insights into the operational development of the company, through the data obtained in this way.

Our thesis is that the market is now looking too negatively at the meal box segment. Large customer volumes that HelloFresh gained during the coronavirus era were lost again over time - overcapacity and increased costs were the consequences. HelloFresh is now focussing more on consumers who order more frequently. While a small group of customers only order a few times, a stable core group of subscribers who have used the subscription for years forms the backbone of the core business of the meal boxes. We assume that this business area will continue to stabilise, and develop into a cash cow that will finance growth in other areas.

HelloFresh has entered the ready-to-eat (RTE) segment with the purchase of Factor in the USA. The RTE segment is highly profitable and offers a clear growth opportunity, as ready-to-eat meals are perceived as a convenient and cost-effective alternative to restaurant meals. Our analyses show that HelloFresh could generate sales of over 2 billion euros in the ready-to-eat segment alone by 2024. In our view, this is something that the market has underestimated or more or less priced out. In addition to the RTE business, we recognise the potential in other DTC (direct-to-consumer) food divisions of HelloFresh, such as the meat trading business Good Chop and the pet food business The Pets Table. Overall, we see great potential for a significant increase in value due to the strong positioning in high-growth areas, even after the share has recently more than doubled since its low point.

The AI-driven development already started at the end of 2022 and the beginning of 2023, but it has certainly played a significant role in the fund's performance this year, too. Inflows have increased in line with the fund's performance. This is particularly noticeable in the form of increased interest from institutional clients and the wholesale segment – we are in intensive discussions with both client groups.

While gross inflows have increased on the one hand, we are also seeing outflows from the funds, particularly from the retail share classes, on the other.

The most obvious, or most likely, explanation is that investors who got in at peak prices in 2021 and held on in 2022 and 2023 are now exiting or taking profits when new all-time highs are reached. Net inflows and outflows are currently balanced.

At the beginning of 2018, when Jan Beckers launched the fund, the internet was the most prominent technology theme. The renaming reflects the further development of our portfolio. Originally, the focus was on internet-based business models and direct-to-consumer companies, which was the core of our strategy at the time. Today, we cover a very broad spectrum within the technology sector. With our 20-strong investment team and advanced analytics, such as generative AI, we have significantly expanded our ability to cover different sub-sectors. The name „technology“ better describes what we are focussing on, without forgetting the roots of our proven strategy. We are not doing anything different today than we did in the past; this is a gradual build-up on our proven strategy, which has made us one of the highest-yielding equity funds in Europe since our launch.

No. Trump's election was a special moment for the crypto market, a kind of „clearing event“. Some of the expected increase in value is now certainly priced in, both in Bitcoin and in shares from the crypto ecosystem.

Trump's election victory has fundamentally changed the crypto market. The crypto-critical stance of the SEC under the Democrats scared off many investors. With Trump, we expect the SEC to scale back its measures, which will create regulatory clarity. There is also the possibility that under Trump, proactive measures will be taken to promote the crypto sector, such as the authorisation of additional custodians or even the introduction of national Bitcoin reserves. And there is another point that may not be strongly priced in at the moment.

Another driver is increasing institutional adoption, as shown by the strong demand for Bitcoin ETFs. The ETF launched by Blackrock is the fastest growing of its kind, and has already seen inflows of over 25 billion dollars after just ten months. It is also interesting to note that in the past, the majority of financial advisors and banks were very cautious about even suggesting investments in this area to their clients, because they feared the regulatory environment. This counterargument is now falling away, which could lead to a further increase in demand with a certain time lag, meaning that we could see significantly greater inflows of funds in 2025 than we have already seen in 2024.

Exactly that. We have honed our Product-Market-Fit based on the findings of many discussions with investors. We have developed a product that is tailored to the requirements of conservative investors in particular, thus meeting the increased demand for a risk-oriented portfolio construction to complement the primarily yield-orientated Bit Global Technology Leaders. Although the Bit Defensive Growth portfolio is based on that of the Bit Global Technology Leaders, it complements it with carefully selected securities that have particularly positive correlation characteristics to the portfolio of the flagship fund. A hedge overlay with derivatives, algorithmic portfolio construction and other features aims to ensure that the fund has similar risk characteristics to broadly diversified tech index ETFs or defensive technology equity funds in terms of volatility and drawdown.

Meet the person: Marcel Oldenkott is Managing Director and Co-CIO of Bit Capital and heads the Biotech and Systematic Strategies, Macro Research, Risk Management and Data Engineering departments. He has more than 15 years of experience in the German asset management industry.