We live in an era of extraordinary imagination. Rapid advances in generative AI have become a pervasive force – much as internet-enabled devices were in prior decades. While early signs of AI-driven disruption became evident as early as Q1 2026, we remain firmly in the ‘glass half full’ camp. In our view, AI presents far more opportunities than risks. The world has found a new growth engine in AI – capable of unlocking unprecedented investment opportunities – reinforcing ‘Global Tech’ as one of the key pillars in driving long-term portfolio returns.

Global Tech and its importance

Global Tech includes both tech and tech-enabled business models – such as those in IT, communication services, fintech and healthtech – expanding at an above-average pace, accounting for roughly 40% of global equities. From an asset allocation point of view, Global Tech represents around 20% of our Chief Investment Office (CIO) Foundation Balanced portfolio. Our back-testing shows that the Global Tech theme has historically been rewarding for investors, delivering consistent outperformance vs. the other investment style, global value. We see no reason for this to change.

On average, Global Tech offers 10-15% earnings growth per annum, compared with 6-9% earnings growth per annum for global value counterparts – a differential that supports the valuation gap. As innovation accelerates and competitive advantages widen, markets are likely to continue rewarding business models with superior and durable growth prospects. Capturing these opportunities, however, requires a disciplined and systematic approach.

Why active management surpasses passive strategy

We believe the strongest case for outperformance lies in an active investment approach, rather than passive exposure. The dynamic and disruptive nature of once-in-a-generation forces, such as AI, is likely to amplify market volatility, shorten business cycles and drive disruption. Active management is therefore essential to navigate these shifts effectively. This stems from the inherently dynamic nature of tech investing, where business models must continuously adapt to rapid innovation cycles. In this environment, actively rebalancing portfolios to reflect evolving fundamentals can help investors manage significant drawdowns while positioning for emerging opportunities at key inflection points.

Three key developments reinforce our case for active management in Global Tech:

1. Market volatility, including idiosyncratic risks such as regulatory shifts, product cycles, leadership changes or supply chain disruptions: These drawdowns have historically presented attractive entry points and are not reasons for panic. Global Tech has consistently rebounded strongly over the subsequent six months after frequent drawdowns. This underscores the value of an active approach – one that distinguishes between short-term noise and long-term fundamentals

2. Navigating business cycles within Global Tech’s diverse segments: Within the tech sector, five key industries – semiconductors, hardware, internet, software and IT services – tend to perform differently depending on the stage of the business cycle. Active approaches that can correctly identify the business cycle and apply industry playbooks – by overweighting or underweighting specific sub-segments – can help generate alpha.

3. Future-proofing disruption risks, an inherent feature of the Global Tech theme: Innovation is both a driver and a disruptor for the theme. Understanding evolving business models and proactively managing disruption risk can help investors stay focused and avoid emotionally driven decisions.

By actively managing volatility, navigating sector and industry cycles, and managing disruption risks, investors can enhance returns and mitigate downside risks more effectively than through a passive approach.

The SCB Framework to invest in Global Tech

Given that most companies in the Global Tech universe typically report above-average earnings growth, there needs to be some form of differentiation. It becomes imperative not only to segment companies into distinct buckets but also to right-size exposures from a portfolio construction perspective. The SCB Framework to invest in Global Tech identifies three broad opportunity sets and explicitly right-sizes exposure across them:

• Structural opportunities (S): Secular business models offering long-term visibility with strong compounding potential

• Cyclical opportunities (C): Tactical opportunities arising from valuation mismatches and demand-supply imbalances as industries and regions embrace innovation at different speeds

• Binary opportunities (B): Select turnaround as well as moonshot opportunities linked to next frontier technologies that offer optionality through an asymmetric risk-reward profile

We believe the 70-20-10 rule is well suited to Global Tech portfolios, with around 70% allocated to structural opportunities, 20% directed towards cyclical opportunities and 10% reserved for binary opportunities.

Investors must recognise the strategic importance of Global Tech and avoid complacency at a time when disruptive technologies such as AI are fundamentally reshaping the investment landscape. The future is arriving faster than ever. We believe that active management – anchored by clear frameworks and a disciplined commitment to staying invested – can make Global Tech a highly rewarding long-term opportunity. Over time, investors stand to benefit from the compounding power of business models with above-average and durable growth prospects.