Markets continue to move through a noisy period, with rising interest rates, a gold rally and the AI hardware trade all shaping investor sentiment.
This month Pie Funds Founder and Chief Investment Officer Mike Taylor and Kent Williams, Head of Global Equities, join Wealth Adviser Sam de Court to discuss what's driving markets - and where they're seeing opportunities.
Watch the video or read on for the full story.
Rates, gold, and the “debasement trade”
Chief Investment Officer Mike Taylor says the political noise this month - tariffs, conflict in the Middle East - mattered less to markets than a more familiar force: interest rates creeping higher around the world. In the US, the Treasury Secretary tried to talk yields down, including floating the idea of the Treasury buying longer-dated bonds itself. It worked for about 48 hours before yields resumed climbing.
The flow-on effect was a strong month for commodities, gold in particular. Investors have increasingly framed this as a “debasement trade” - a bet that the US is effectively debasing (or deliberately lowering the value of) its own currency against other assets. Gold has been the biggest beneficiary, bouncing hard through August after coming off its highs between May and mid-July; Bitcoin has rallied on the same theme.
That's flowed through directly to Pie's Australasian funds, which count gold and resources among their key exposures. After a tough 12 months or so, they've had a better month so far in August. “A lot of it has been driven by resources,” he says, pointing to funds like the Pie Emerging Companies Fund with heavy resources weightings - some gold names are up 40–50% for the month alone. It's not only gold, though: several portfolio companies have posted strong results through reporting season (which is about three-quarters complete), and some oversold software names have rallied too.
The AI hardware trade - and how to ride it without the drawdowns
Head of Global Equities Kent Williams, who's run Pie’s Global Growth and Global Growth 2 funds for around 18 months, reports both funds returned over 22% for the 12 months to the end of July (after fees, before tax) - slightly ahead of benchmark, at a time when some global active managers have significantly lagged benchmark.
Two themes have driven that: gold, and the broader AI hardware / semiconductor trade. Kent estimates the latter alone accounts for at least half of global sharemarkets’ roughly 20% return (before fees and tax) over the past year, despite AI hardware making up only 15–20% of the market by weight - a small part of the index doing an outsized share of the work, with some individual stocks up anywhere from 1,200% to 2,000% over 12 months.
Staying “market aware” - alert enough not to be caught offside by a trend like this - is central to Kent's process. But riding the trade hasn't meant taking on maximum risk. When semiconductor stocks fell around 20% in July, the Pie Global Growth Fund still outperformed the benchmark. Kent puts that down to portfolio construction: staying overweight the AI hardware theme, but deliberately avoiding the riskiest, least profitable and most expensive names within it, in favour of a blend built to deliver more consistent returns through the cycle.
Thanks for watching
After six and half years, this is our final Market Update. We've enjoyed bringing you these videos, and this final one feels like a good place to say thank you - to everyone who's watched, listened, and read the articles along the way.
But don’t worry – we’ll continue to bring you our market insights in our monthly Slice of Pie newsletter and share them on our website and via our social media channels. Plus our annual investor roadshow is coming up around the country in November - invites land in the next couple of months.