Partner Insight: How a growth fund is benefiting from the intersection of technology and finance
Bruce Glazer presents the Wellington FinTech Fund amid a golden age for innovation in the sector
How do you characterise the Wellington FinTech Fund?
The portfolio can be defined as a growth fund that looks to benefit from the increasing intersection of technology and financial services. There are several differentiating factors from other growth-focused portfolios, however. Firstly, we have a dedicated team that has been, and will continue to be, 100% focused on this sector. Secondly, our strong belief in the purity of the theme and the richness of the opportunity set means we set a very high bar.
Any company we invest in requires 80% of its revenue to come from fintech — this means there is no Apple or Facebook in the portfolio. Lastly, our concentrated positions and low stock turnover approach allows us to benefit from high-conviction ideas and the power of compounding over the long term.
What is your investment process?
In looking for long-term opportunities, the goal of our research is to understand how the industry will evolve and which businesses are best positioned to sustain or enhance their growth rate over the next decade plus.
We are drawn to businesses with deep moats given their scale, proprietary data, and innovative technology. Importantly, we need to understand the value proposition to the end user, and what the risks are to incumbents from new entrants and vice versa.
What kind of returns can investors expect from the Fund?
We believe our opportunity set lends itself to finding companies that can sustain close to 20% earnings-per-share growth over the long term. We would expect the portfolio to track earnings growth over the long term, recognising it will not be a straight line and there will be periods when returns exceed earnings growth, like in 2019, and periods when it lags earnings growth, like in 2018.