Fund update: R-co Thematic Blockchain Global Equity — December 2023

"A flight to Quality" - Larry Fink, BlackRock's CEO talking about recent investment flows towards digital assets

In November, growth equity markets rallied sharply, as Fed’s relatively more dovish comments on slowing trailing inflation encouraged investors to swiftly come back to long-duration assets. Digital assets investment products continued to receive significant inflows with more than US$1bn invested in November alone, led by investors from Canada and Germany. This is the highest level reached since 2022⁽¹⁾.

Digital Assets / Fintech exposure was this month again the best performance contributor for the portfolio. This was led by Coinbase, BC Technology and Galaxy Digital, as their earnings are positively supported by adoption acceleration. Overall, expectations of digital assets spot ETFs approvals, further supported by BlackRock’s additional SEC filing in November, likely encouraged investors in increasing exposure to high quality companies exposed to this asset class. The Audit trail/Industrial use cases portfolio bucket was the second-best performance contributor. This was led by Palantir, Vobile and Acciona Energia.

In this context, we took some profits on the Digital Assets / Fintechs bucket following the performance of Galaxy Digital, Coinbase and BC Technology to marginally balance the increase of portfolio exposure to this sub-thematic. For the same reason, we marginally trimmed Blockchain Infrastructure company Cleanspark on the back of a strong outperformance. We reduced our exposure to Nvidia prior to quarterly earnings publication⁽²⁾.

Industry news to watch:

• Siemens, Cargill and FedEx use JPMorgan’s blockchain solution Onyx on a daily basis. Siemens was the first to use JPMorgan Coin programmable abilities for Corporate Treasury back in 2021.
• Disney launches Disney Pinnacle, an NFT startup that will offer pin-inspired digital collectibles based on Disney, Pixar and Star Wars characters and properties.
• Ubisoft is building a Web3 gaming experience with Immutable to offer digital ownership to players through NFTs.
• Commerzbank is granted digital assets custody license by German regulator BaFin.
• SBI Holdings partners with stablecoin company Circle to expand the use of stablecoins and Web3 services in Japan, taking advantage of the June 2023 Revised Payment Services Act establishing “collateralized” stablecoins backed by legal tender.