Charles-Edouard Bilbault
Global Equities Portfolio Manager

In October, uncertainty around AI compute investments returns weighed on market sentiment and risk assets. The sharp increase in CoreWeave’s debt yields led a broad correction across the AI infrastructure sector. Scrutiny increased on capital-intensive companies dependent on external funding, like neoclouds and crypto-miners with diversified exposure to AI compute hosting. Earnings season is expected to differentiate operators with high credit-rated customers, attractive power contracts, secured grid capacity and advanced permits, as Democrats’ midterm election victory added uncertainty around grid interconnection, power supply and project energization approvals. On digital assets, Binance’s hack at the end of the month added to negative sentiment, but also highlighted the crypto ecosystem’s ability to coordinate an effective crisis response and insure customer funds despite the breach. Meanwhile, tokenization continued to scale with strong institutional traction. Intercontinental Exchange invested in Hyperliquid-based Trade.xyz and entered into an integration partnership for perpetual futures, complementing its existing derivatives offering. This is part of a broader onshoring of most innovative crypto companies to the US, setting up conditions for increased regulated access to digital assets, thus increasing total addressable market for this asset class.
Against this backdrop, the fund went back into high volatility regime. As such, digital assets/fintech and blockchain infrastructure category were main detractors, while transportation and logistics achieved slightly positive performance as freight rates held up. Earnings season started in October with most portfolio companies publishing in November. Coinbase positively surprised on US$333m EBITDA, 20% higher than consensus despite difficult market environment4. The company kept gaining market share with now 12.5% of global crypto market cap on platform and record 10.7% of total crypto trading volume4. Diversification to derivatives supported an increase in transaction take rate while prediction markets reached US$200m annualized run rate4. Earnings resilience was also supported by sustainable stablecoin revenue, reaching US$307m – Coinbase captured around half of the economics generated by USDC, while increasing the share of USDC held across its platform to 30% of total circulation4. We remained disciplined and took some profits in software companies Snowflake, Okta and GitLab and container liner Cosco Shipping following their strong outperformance over the period relative to their sectors. We added to digital asset/fintech companies on weakness, as Securitize, Galaxy Digital and Figure Technology, and initiated a position in Cypherpunk Technologies, a Zcash miner benefiting from favorable mining economics and Zcash’s native quantum-resilience characteristics. We ended the month with 98.2% equity exposure5.
Morgan Stanley expects to support tokenized equity in Q1 2027
Leading securities processing infrastructure company Broadridge integrates Kalshi event contracts into institutional trading NYFIX order-routing network
Google custody MPC solution is in private preview with several major financial institutions testing the technology and parent company Alphabet using it to secure its own digital assets on Ethereum and Solana