For twenty years, the team at Loup has had a pulse on technology and a point of view on how that tech will change the world. The cutting edge of that change is frontier tech, driven today by AI, fintech, robotics, autonomous and electric vehicles, and virtual/augmented reality. We provide exposure to these themes through our partners at Innovator Capital Management. For more information click here.
Why Frontier Tech?
Frontier tech represents the forward-most edge of understanding and achievement in technology. By definition, what is frontier today will not be frontier tomorrow—it is dynamic. These are the technologies with the greatest opportunity to create value for investors
Performance
Below is the Loup Frontier Tech Index performance update as of the end of November:
What’s on our minds this month
LOUP’s performance for the month lagged our QQQ benchmark, down 3% vs. the broader tech market up 2%. Recapping November, three topics are top of mind:
1) Multiple compression in high growth stocks weighs on performance. During the month of November, LOUP’s performance was negatively impacted as investors reduced their exposure to high-growth tech stocks. It’s little consolation that it did perform better than its high-growth peer, the Russell 2000, which was down 6.5% in the month. LOUP fared better than the Russell 2000 given it’s comprised of companies that have higher earnings compared to the average Russell 2000 company. Our core thesis on the themes and positioning of the index has not changed.
2) Getting cautious on EV/AV space. Every year investors get behind a handful of themes. In 2021, EVs were one of those themes. For 2022, we are getting more cautious on EVs given our belief that the huge run these companies have had in 2021 will be difficult to replicate in 2022. This view is reflected in the fact that this category currently has the lowest weighting in the Loup Frontier Tech ETF.
3) Metaverse goes mainstream. We’re going to be talking a lot about the metaverse over the next five years, and the recent move higher in many of these companies is just the beginning. Our belief is the metaverse will become the third manifestation of the internet (aka Web 3.0), which some of the companies in the ETF will help enable, including:
- Coinbase (COIN) – The bank of the metaverse, as it’s the most trusted on- and off-ramp for crypto.
- Unity Software (U) – Development tools for the metaverse.
- Take-Two Interactive (TTWO), Activision Blizzard (ATVI) – Early beneficiaries of gaming in the metaverse.
Changes to the Loup Frontier Tech Index
We removed Rocket Companies (RKT) because we wanted more exposure to companies building the infrastructure to connect traditional banking with crypto. We replaced Rocket with Signature Bank (SBNY) because they have APIs that let people do more efficient transfers between fiat money and crypto.
Top 10 Holdings (Weights as of December 8, 2021)
- SK Hynix Inc, 6.12%
- Harmonic Drive Systems Inc, 5.21%
- Baidu Inc, 5.02%
- Affirm Holdings Inc, 4.06%
- Micron Technology Inc, 3.73%
- Teradyne Inc, 3.59%
- Ambarella Inc, 3.46%
- II-VI Inc, 3.38%
- Nintendo Co LTD, 3.36%
- Aerovironment Inc, 3.32%
Weight by Theme
- VR/AR – 34%
- AI – 22%
- Fintech– 22%
- Robotics – 15%
- EVs/AVs– 11%
Learn More
The Loup Frontier Tech Index tracks the performance of publicly traded companies developing frontier technologies including, but not limited to, AI, fintech, robotics, autonomous and electric vehicles, and virtual/augmented reality. We’ve licensed the index to Innovator Capital Management. For more information click here.
Register for our next Tech Roundtable with the Loup team, a quarterly webinar to discuss the latest in frontier tech.