The gold to gigawatts story driving your clients’ investing returns
Artificial intelligence (AI) and electrification are linked global themes that South African investors struggle to latch onto by investing on the Johannesburg Stock Exchange (JSE). Yes, we have Naspers/Prosus and a handful of other tech counters; but to truly diversify your or your clients’ portfolios you need to invest offshore.
Hot, theme-linked sectors
Junaid Bray, a portfolio manager at Laurium Capital, which runs the Curate Momentum Equity Fund, says the fund’s mandate allows diversified exposure to themes through offshore investments in the energy, pharmaceuticals and technology sectors. “We can go offshore to invest in some of the sectors and themes that we do not ordinarily get direct access to via the JSE,” he said during a virtual presentation titled ‘Electrifying equity’.
You could use ‘electrifying’ to describe the equity fund’s year-to-date performance too, with investors being rewarded with 24.5% in the nine months ending September 2025. The fund is roughly two-thirds South African equity and the balance global equity, so it makes sense to benchmark it against a combination of the local CAP SWIX Index and the global All Country World Index (ACWI) in similar proportions. Year-to-date the fund has outperformed this custom benchmark by 1.8%.
“The local market has returned about 30.9% year-to-date while the ACWI is up about 8.2% in rand,” Bray said, before reflecting on how the JSE’s return was achieved. It turns out that listed firms in the gold and platinum group metal (PGM) sectors weighed in with 20.3% of the 30.9% total, followed by 5.8% from Naspers/Prosus and 2.4% from telcos, media and technology. “You can see how narrow the local market performance has been,” Bray said. In fact, had gold not surged north of USD4000 per ounce, dragging PGM prices with it, the picture would have been very different.
Reasons for gold’s resurgence
The gold price is strong due to a combination of geopolitical and supply and demand factors. According to Bray, gold’s recent rally reflects the geopolitics and heightened uncertainty that has afflicted global markets over the last two years. Notably, gold reserves have been weaponised in the years since Russia invaded Ukraine.
“Central banks, especially in emerging markets, have started diversifying away from the dollar and into gold,” the presenter said. International Monetary Fund (IMF) data shows a clear trend, with world central banks holding around 21% of their total reserves in gold compared to around 13% two years ago. The percentage of reserves held in US dollars has slipped over the same timeframe, from 60% to around 57%.
The portfolio manager shared a chart of global gold exchange traded fund (ETF) holdings to show how investment flows from both institutional and retail investors have chased the precious metal higher. “In the last two or three years the holdings in ETFs have picked up, [confirming significant] investment inflows, and helping to take the gold price higher,” Bray explained. The hope is that export revenues from the gold and PGM sectors, together with lower-than-trend oil prices, will support South Africa’s current account while rising mining royalties and tax collections will be a boon for the South African Revenue Service.
There are multiple spin-offs for the domestic economy and so-called South Africa Inc shares. For example, households with breadwinners in the mining sector often share in the spoils through higher bonuses and wages. “We expect the full benefit of this gold price boom to start coming through in the next year or so,” Bray said. He mentioned improving terms of trade, lower interest rates and rising disposable incomes alongside turnarounds in electricity supply and logistics as net positives for local equities. A weakening US dollar is the cherry on top for emerging market economies.
Introducing the hyperscalers
Capital expenditure on AI dominated the global equity segment of the presentation. Side-stepping speculation on whether capex forecasts will be met, or whether tech shares are in bubble territory, Bray observed that the major hyperscalers will be spending more than a trillion dollars on AI and data centres over the coming three years. Amazon, Google, Meta, Nvidia and Oracle are already on track to spend a combined USD381 billion this year. Fund managers are, therefore, thinking outside the box to see which sectors will benefit indirectly from this capex.
“AI-related data centres are highly energy intensive and could use up to four times more electricity than a traditional server farm,” Bray said, adding that the resulting demand for US power could more than double in the coming years. This hunger for electrification explains the Curate Momentum Equity Fund’s inclusion of electrical contractor Quanta Services, and GE Vernova, which deals in gas turbines and power generation. “We have held these names in our fund, and they have done well for us, and we continue to see a good outlook for them,” he said.
Copper producers stand out as another clear beneficiary of higher capex on electrification. The sense is that the combination of capex by hyperscale tech firms and the reshoring of key US industries will trigger a significant increase in copper demand. The fund manager’s preferred equity exposures to this sub-theme include Anglo American, which produces around 70% of its total revenues from the metal, and Glencore, which is about 40% exposed. If you add Broadcom and Siemens to the list, the electrifying equity theme makes perfect sense, explaining why the six shares, two local and four offshore, make up about 25% of the fund.
Geographic plus sectoral diversification
“The fund is well diversified,” Bray said. “We are very bullish on financials, particularly SA banks and some of the SA insurers, and some of the global banks as well.” Financials make up 23% of the fund’s total sector exposure, followed by materials (22%), consumer discretionary (18%), consumer staples (11%) and technology (6%). In South Africa, the financial exposure comes from Absa, FirstRand and Momentum. Globally, technology exposure is through Broadcom, Microsoft and Meta (Facebook).
The portfolio manager explained that these three technology shares were chosen for their long-term earnings prospects and reasonable, relative to the sector, valuations. Global consumer exposure comes courtesy of Arca Continental, which is a Mexican and American Coke bottler, and Essilor Luxottica, a sunglass manufacturer and owner of the Ray-Ban brand. And finally, for some non-generic pharmaceutical exposure, the global portfolio added Eli Lilly and United Healthcare.
1.4 Billion users cannot be wrong
Naspers/Prosus warrants a mention here too. The fund holds the JSE listing of this tech share as part of its domestic ‘global consumer’ segment alongside AB InBev, Bidcorp and British American Tobacco. “We are very bullish on Naspers/Prosus and view Tencent as a high-quality company that will benefit from AI in China; they have a 1.4 billion user base within WeChat, their messaging super app,” Bray said.
He concluded his talk by saying the Laurium Capital team looked forward to adding alpha for equity fund investors over the balance of 2025 and in the years ahead. And that is good news for financial advisers backing the fund.
Writer’s thoughts: Fund manager presentations can help you spot trends and ideas, but not every story holds up to scrutiny. How much value do you attach to fund manager presentations, and how do you leverage this information in client interactions? Please comment below, interact with us on X at @fanews_online or email us your thoughts [email protected].
