A star fund manager\u2019s scepticism around artificial intelligence has personally cost him $2.3 billion over the past year, but he\u2019s doubling down on his bet that the share market\u2019s hottest trade in 2025 is set to collapse some point soon.<\/p>\n
Rajiv Jain, the founder of ASX-listed GQG Partners, says the investor mania for businesses linked to advances in artificial intelligence is now comparable to the dot-com bubble of 2000, when many companies tied to the internet\u2019s development soared in value before crashing 80 per cent or more.<\/p>\n
\u201cIn our view, the momentum in these growth-oriented segments of the market\u2014including big tech and companies tied to the AI infrastructure buildout \u2014 could reverse at any moment,\u201d Mr Jain warned investors in September.<\/p>\n
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By continuing you agree to our Terms<\/a> and Privacy Policy<\/a>.<\/p>\n \u201cAs a result, we\u2019ve adopted a much more cautious stance toward these investments. We anticipate the next few years for the sector will be defined by deteriorating fundamentals: lower growth, higher competition, and greater capital intensity.\u201d<\/p>\n The trouble for Mr Jain is his caution has seen the $US167.2 billion ($256b) asset manager\u2019s flagship GQG Global Fund post a negative 1.02 per cent return after fees over the 12 months to September 30, versus a 22.65 per cent return for its global benchmark.<\/p>\n The horror performance has led investors to yank funds from Mr Jain\u2019s business and made it the talk of Australia\u2019s funds management sector for its effort to swim against the tide of capital flooding into AI.<\/p>\n The doubts around Mr Jain\u2019s call have seen GQG shares sink 41 per cent over the past year. The value of Mr Jain\u2019s personal stake has slumped from $5.5 billion to $3.2 billion as he insists the popular tech winners of the past decade are overvalued.<\/p>\n Monster 14.3 per cent dividend yield<\/p>\n Such are the doubts over Mr Jain\u2019s contrarian call against mega-cap tech that the shares in his listed business now offers investors a monster annual dividend yield of 14.3 per cent.<\/p>\n This yield is based on a $1.60 share price and forecasts by investment bank UBS for total dividends of $US0.15 per share (22.9c) cents per share in 2025.<\/p>\n On a whopping 14.3 per cent yield investors will likely profit handsomely from income and capital gains if Mr Jain\u2019s GQG Partners turns its performance around and the air comes out of the tech stock bull run.<\/p>\n Over calendar year 2026, UBS only expects GQG\u2019s dividends to fall slightly to $US0.14 per share (21.4c) cents per share to put it on an income yield of 13.3 per cent if the investment bank\u2019s analysts are correct.<\/p>\n The curveball is that an excessively high dividend yield is often a sign the market expects a dividend cut.<\/p>\n That means UBS may be too optimistic and reveals how the business has become a lightning rod for different views over the sustainability of runaway share prices in businesses linked to AI.<\/p>\n \u201cWhile we are cognisant of the trajectory of (investment) performance and flow, the 3Q (September quarter) annualised dividend of ~14 per cent more than compensates investors around near-term risks in our view,\u201d UBS said on October 16.<\/p>\n The broker has a buy rating on the stock and $2.25 price target a long way above the market\u2019s valuation of $1.60.<\/p>\n It would be a mistake to write off Mr Jain and GQG Partners for their contrarian calls, as the old market adage goes that it\u2019s better to be six months too early, than six minutes too late, when it comes to positioning defensively to protect a portfolio from a market crash.<\/p>\n Whether that correction ever comes is the big unknown, and the longer Mr Jain has to wait the more the pressure will come on to pivot his view on the world\u2019s most popular trade.<\/p>\n","protected":false},"excerpt":{"rendered":"A star fund manager\u2019s scepticism around artificial intelligence has personally cost him $2.3 billion over the past year,…\n","protected":false},"author":2,"featured_media":250515,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[20],"tags":[256,254,255,64,63,99,105],"class_list":{"0":"post-250514","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-artificial-intelligence","8":"tag-ai","9":"tag-artificial-intelligence","10":"tag-artificialintelligence","11":"tag-au","12":"tag-australia","13":"tag-business","14":"tag-technology"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/250514","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/comments?post=250514"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/posts\/250514\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media\/250515"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/media?parent=250514"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/categories?post=250514"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/au\/wp-json\/wp\/v2\/tags?post=250514"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}