Market Commentary - November 2024

November was a record month for the Fund with a return of +14.9%. Indeed, the US election was a trigger for volatility in a positive sense. The result was clear and a certain Trump fever took hold, not least for the tech sector. Elon Musk's clear influence is probably part of the explanation, as he will work for a favorable environment for tech and not least the space sector, which is one of MetaSpace Fund's core areas. This initial fever has now subsided somewhat, and the question is whether we will see a rally to end the year, as December is usually a strong month for the stock market. The most important event during the month is the Fed's interest rate meeting. The inflation figures have basically come in as expected, but on the higher side. The jobs data, which I have written about several times before, will probably be what determines their decision. Right now the market is pricing in a 0.25% cut, by more than 70%, but some believe that the Fed may pause their cuts in December to evaluate the impact of Trump's policies and when inflation is still slightly above target.

The CME Group has developed one of the most sophisticated tools for predicting the probability of the Fed changing interest rates, based on futures trading. At the time of writing, the probability of a December cut of 0.25% is estimated at 76%.

Holdings

US holdings accounted for most of the Fund's positive performance, led by space companies. Rocket Lab, the Fund's largest holding, performed strongly, up 139% for the month, while Planet Labs was up 73%. Rocket Lab reported several new contracts and an order backlog of over USD 1 billion. Their existing Electron rocket has been launched over 50 times and is now a profitable part of the business. At the same time, the company is investing heavily in the development of the new and larger Neutron rocket, which is expected to be launched in 2025. It was particularly exciting to see that Rocket Lab has already received orders for Neutron launches. Despite the strong performance, some of the shareholding will be hedged going forward, as the valuation is challenging. Planet Labs, which operates the world's largest fleet of Earth Observation satellites, also had a strong month after announcing new deals.

The few holdings that delivered negative returns were localized to Europe and the Nordics. Swedish VR/AR game developer Beyond Frames was down -22%. The company released a rather cautious report with few game releases and announced that further games will be postponed until 2025.

What's new?

Here we present one of many news in our megatrends:

As I have previously written about, the way forward for Augmented Reality glasses seems to be simpler glasses that combine AR with AI, thus lowering the technical requirements along with the size and price tag, while at the same time adding a lot of functionality by combining AI and AR. I have previously written about Meta's investment in a pair of such “smart glasses” that Zuckeberg showed a prototype of this fall.

This development is becoming more and more apparent. In November, news came from several tech giants who, like Meta, also aim to launch smart glasses that combine AR and AI. For example, Samsung and the Chinese giants Xiaomi and Baidu all came out with the news that they have the ambition to launch smart glasses in 2025.