I’m a global fund manager – here’s the video game firm I’d invest in NOW… and how I’m handling Trump’s tariffs

Each month, we put a senior fund or investment manager to task with tough questions for our I’m a fund manager series to find out how they manage their own money. In this instalment, we spoke to Stephen Yiu, fund manager at WS Blue Whale Growth Fund.

When we question fund managers, we want to know where they’d invest for the next year – and next 10 years – and what pitfalls to avoid. 

We also quiz them about Nvidia, gold, and bitcoin and their greatest ever investing mistake. 

The £1.3 billion Blue Whale global equity fund holds around 30 large cap companies across developed markets.

Since its inception in September 2017, the fund has returned over 140 per cent to date. 

It invests mainly in North American companies but it also has sizeable holdings in Europe and the Asia Pacific region.

The technology sector appears to be its most preferred area of the market at present with large holdings in Broadcom and Nvidia,

It also has large holdings in the American conglomerate Danaher and the online sports betting and gaming company, Flutter.

1. If you could invest in only one company for the next 10 years, what would it be?

Meta is likely to be the ‘true AI winner’ within the Magnificent 7 (beyond Nvidia). 

It has amassed over 3 billion users in its ecosystem of WhatsApp, Instagram, and Facebook, which may allow it to create a personalised AI assistant for us in the digital world, driving efficiency in our day-to-day activities.

2. What about for the next 12 months?

Nintendo is set to launch the next generation of the Switch console this year. Excitement is building among its fans, including over 100 million users. 

If the Switch 2 is a hit, there could be explosive growth in demand over the next 12 months. 

3. What sector would you be avoiding and why?

I would avoid any sector that might be hit by Trump’s tariffs and policies over the next four years. This is a growing list.

4. Which sector do you think people should be most excited about and why?

I look for market-leading companies wherever they might be in the developed world, rather than focusing on specific countries. 

For example, Visa and Mastercard operate as a duopoly in payment networks, earning their revenue internationally.

5. Do you think the UK market is cheap and why?

The UK continues to produce world class companies. But it gets complicated. Flutter is a gaming company, which has continued to grow but recently moved its listing from London to New York. 

We switched our stake to its US shares because they benefit from significantly higher liquidity.

6. Is there a UK tech firm you think has great potential?

LSEG (London Stock Exchange Group) is being transformed, embracing AI in its data business, which makes up more than 50 per cent of the group. 

It may re-list its shares in the US, as well as spin out the London Stock Exchange itself (less than 3 per cent of revenue) at a premium. 

These steps could significantly increase its share liquidity profile, in turn boosting its market value.

7. Your fund is heavily weighted in the US – is that an expensive and risky place to be at the moment?

Where a company is listed is immaterial compared to where it earns its revenues. In my portfolio, 70 per cent of the companies are listed in the US, but they are global leaders, and only 40 per cent of their revenues come from North American markets. 

This means the businesses are fundamentally global, not American. Unlike the US stock market, their valuations are attractive, with quality growth outperformer characteristics.

8. What do you say to those who say the US is in a bubble?

Avoid passive funds that track the US stock market, as they have been expensive in valuation terms. 

Instead, invest selectively in US companies that offer quality growth outperformer characteristics, and trade at attractive valuations.

9. Are you concerned about Donald Trump’s potential impact on your portfolio?

The full impact of America’s policies is yet to emerge, partly because those policies are changing day by day. 

But I try to avoid companies that could be hurt by US policies and instead invest in companies that can either benefit from the current administration or can rise above it, maintaining strong earnings power.

10. Nvidia – do you think it will ultimately boom or bust?

I have consistently included Nvidia in my top 10 since 2022. I continue to rate its strong competitive position: there are six million software engineers around the world who use Nvidia’s proprietary CUDA platform to create AI applications using its GPUs. 

We are in the early stages of AI application development, and the ‘boom’ has only just begun.

11. Is there any stock you believe has the potential to be the next Nvidia?

Nvidia’s explosive rise, generating over $200 billion in revenue this year (up from less than $30 billion in 2022), may be a once-in-a-lifetime wonder. 

Its biggest challenger is Broadcom (which we also own). Broadcom works with Big Tech to provide in-house GPU capabilities, with significant potential to become the next Nvidia, albeit in a more gradual manner.

12. What is the likely impact of DeepSeek? 

DeepSeek’s breakthrough in lowering training costs will ultimately reduce the price users pay, thereby accelerating the development of AI applications. This is akin to how Apple’s iOS AppStore now offers millions of apps. 

13. Do you see any investment opportunities in China?

For us to invest in China, confidence in corporate governance and shareholders’ rights must be established.

14. Should investors be looking to rebalance their portfolios away from the US?

Yes and no. It depends on where you can find the most attractive quality growth outperformers, such as owning Leonardo in Europe. 

However, most of our significant outperformers are still American companies, such as Nvidia and Meta.

15. Should investors focus on growth or value stocks?

I look for quality growth companies with explosive growth characteristics, but also appreciate quality value companies that are transitioning into this type of quality growth outperformers, such as Leonardo, a leading European defence company.

16. What about active or passive investing?

They both have a role. Passive tracker funds deliver average returns very cheaply. 

But some investors want to achieve higher returns. To maximise their investments, they need to select one of the few active funds that have consistently beaten passive tracker funds.

17. Why should investors choose your fund over a passive Global index fund?

Blue Whale Growth Fund is ranked in the top 1 per cent of active global funds, significantly outperforming passive global tracker funds since its inception.

18. Bitcoin – should this now form a part of everyone’s portfolio?

Bitcoin is perceived as ‘digital gold,’ but concerns about its security remain. 

I would need to see more regulations and real-world use cases before changing my mind.

19. What do you consider the biggest geopolitical threat to global stock markets this year?

I have a more nuanced view. Since Donald Trump’s return to power, there have already been several shocks to stock markets. 

But I embrace headline-volatility, as it plays into the strengths of good active managers who can take views and act on them swiftly, something that passive tracker funds can’t do. 

20. You inherit £100k tomorrow. Where would you invest the money?

I am biased; 100 per cent of my personal investment is in the Blue Whale Growth Fund. 

In my view, this is the best way to maximise my investment in the long run. I hold no other active or passive tracker funds.

21. What’s your greatest ever investment?

My team at Blue Whale and I identified six of the eight one-trillion-dollar companies, including Microsoft, Alphabet, Amazon, Meta, Nvidia, and Broadcom, when their market values were each about $500 billion at the time of our initial investment.

22. What’s your greatest ever investing mistake?

My biggest regret was not being allowed to let Nvidia’s position in my fund exceed 10 per cent due to regulations. 

I was forced to keep selling off shares as its market cap surpassed $1 trillion in June 2023 and continued to $3 trillion. 

I would have preferred to have held on to the stock as it grew in value, maximising my clients’ investments. 

However, the regulations mean we have made over £100m in realised profit for investors.