Abandoning gold, investing in AI: Pictet Strategy Income Fund increases stock exposure to 65%, betting on Asian supply chains and US tech leaders.

Pictet Asset Management, a diversified asset fund under Pictet Asset Management, has significantly increased its stock risk exposure, shifting its cash equivalent position of up to 30% towards artificial intelligence giants in Asia and the United States. The Pictet Strategic Income Fund, managed in Hong Kong, almost doubled its stock allocation to around 65% within weeks following the ceasefire negotiations between the US and Iran in early April, focusing on undervalued infrastructure companies related to artificial intelligence. This strong stance has helped the fund outperform nearly 90% of similar funds in the past month and achieve a return of approximately 43% in the past year. "I believe the cycle of artificial intelligence remains strong and lasting, which will benefit Asian supply chains," said Lorraine Kuo, co-manager of the fund, in an interview last week. "We remain bullish on leading US technology companies - especially those that have everything from models, chips to distribution channels." Popular investment targets include Korean chip manufacturers SK Hynix, whose stock price has surged 194% this year, and Samsung Electronics, whose stock price has risen by over 138%. These two companies accounted for nearly two-thirds of the benchmark Korean Composite Stock Price Index. According to submitted documents, the fund also holds stocks in Alphabet Inc. (GOOGL.US), Apple Inc. (AAPL.US), and NVIDIA Corporation (NVDA.US). Pictet's shift towards risk assets reflects a broader market sentiment shift. Expectations for a resolution of the Middle East situation have prompted investors to unwind defensive bets, while a stronger narrative around artificial intelligence - with supply chain companies issuing shortage warnings - has re-attracted funds to infrastructure-related stocks. According to Andy Wong, head of multi-asset management at Pictet in Hong Kong and the fund's chief manager, they also take a "full-stack" approach to uncover opportunities, including tracking evolving supply chain bottlenecks. "While computing power is important, there are also opportunities at the operating system and application levels," Wong added, noting that the annual income of Anthropic PBC is growing rapidly. In addition to industry giants, investors are increasingly interested in some lesser-known AI supply chain stocks, such as Samsung Electro-Mechanics Co., a multi-layer ceramic capacitor manufacturer, and Ibiden Co., a substrate manufacturer. The stock prices of these two companies have recently hit all-time highs. Meanwhile, as Pictet increases its emphasis on technology stocks, it has also reduced its exposure to traditional safe-haven asset gold. In March of this year, amidst market turmoil caused by the Iran war, the fund increased protective measures, using index hedges instead of physical gold to protect positions. Lorraine Kuo said, "We have not used gold this year because since last year, we realized that the price of gold has risen too quickly, and some China National Gold Group Gold Jewellery retailers engage in speculative activities. The role of gold as a diversification asset has diminished."