The $218m AUM PGIM Jennison Global Equity Opportunities fund has boosted its exposure to some of the largest US tech names including Amazon and Netflix, with the management team targeting opportunities "on sale" as a result of the coronavirus-related sell-off, according to portfolio manager Mark Baribeau.
Baribeau, who manages the fund alongside Thomas Davis, said the team had been mindful that it would be "a mistake to overreact and become too defensive", and have been establishing new positions within the tech space with Apple and Adobe.
He explained the fund had added to Amazon, which at 6.8% of the portfolio is its largest holding, noting that he "would not be surprised" if the firm "delivers better-than-expected" earnings in the first quarter of this year.
Baribeau said: "Amazon…is continuing to hire workers through this period.
"Amazon has had to restrict third-party marketplace sales to make room in its warehouses for the huge surge of demand in areas such as basic household goods, cleaning supplies and healthcare products."
In addition, Baribeau said Netflix, which is the portfolio's third largest allocation at 5%, "is also seeing accelerating demand in this extraordinary situation, with new app downloads soaring in many affected markets - a good lead indicator for future demand".
New investee names Adobe and Apple meanwhile, the latter of which now accounts for 4% of the portfolio, are also examples of "high-quality companies with extremely strong balance sheets", he added, where the fund is looking to add exposure.
Baribeau said: "We are looking to focus on companies with strong brands and great customer acceptance, as well as businesses able to assist others in reducing costs. Companies generating strong cash flow are likely to come through this period in good shape, as well as hopefully offer some downside protection during the volatility.
"In precipitous downturns like this, it is usually a mistake to overreact and become too defensive.
"While we acknowledge the great difficulties this downturn is causing many individuals and businesses, the correction has been so large and broad-based there is now a significant number of companies currently on sale, which look incredibly attractive to us on a medium term view."
The fund has also been cutting exposure to cyclical sectors such as energy, financials, industrials and materials. In addition, it has reduced its positions in "a couple" of sportswear firms, which Baribeau explained were subject to risks to their distribution methods.
Further reductions have also been made to the medical technology sector, due to concerns that "there will be a delay in most elective procedures and both hospital and consumer budgets may be under pressure for the foreseeable future", Baribeau said.
He explained: "While not inherently cyclical businesses, most elective procedures can be deferred, and this is understandably not a current priority for most people."
PGIM Jennison Global Equity Opportunities has achieved an annualised total return of 12.6% over three years, beating its MSCI All Country World benchmark's anualised return of 1.5% over the same period. The fund's latest factsheet shows it was down 11% from the start of the year to 31 March, compared to a 21.4% decline for its benchmark.