Christopher Rossbach, CIO at J Stern & Co, discusses investment opportunities in artificial intelligence and luxury consumer brands, and outlines top stock picks.

Christopher Rossbach (pictured), chief investment officer, portfolio manager of J Stern & Co World Stars Global Equity Fund, sees tremendous investment opportunities in artificial intelligence.

“We are facing a massive tech trend,” Rossbach said at a media event in London. The Luxembourg-domiciled fund, which has outperformed the index over the last 10 years, comes under Article 8 of the EU’s Sustainable Finance Disclosure Regulation (SFDR). It invests in a selection of shares in global companies with a long runway of growth over a period of five to 10 years or more.

Rossbach said it is heavily exposed to AI, with top five holdings including US tech multinationals Nvidia and Alphabet. It is also heavily exposed to the US (60 per cent), 35 per cent to Europe and the rest in the UK. “We are globally invested. We do see opportunities in emerging markets, but we do not have a single stock outside the US and Europe (including the UK),” Rossbach said. Referring to the Taiwan Semiconductor Manufacturing Company (TSMC) which supplies Nvidea with chips, he said: “We don’t invest in TSMC but we think it is an exceptional firm. We prefer Nvidia and ASML. Governance is important to us.” 

The Dutch multinational ASML is a chip-making equipment manufacturer specialising in photolithography systems used to produce integrated circuits, driving innovation in global semiconductors. However, in line with a number of investment managers, he noted that AI data centres, which are exceptionally hungry for energy and water resources, could slow down the growth of AI. He sees a lot of opportunities in tech software too.

The fund also focuses on consumer goods (15 per cent), notably the French luxury goods company Louis Vuitton Moet Hennessy (LVMH) and L’Oreal as well as EssorLuxottica, which he said hasn’t performed so well this year. Other stock picks include Nestle and Nike.

Another area the firm favours is industrial and infrastructure (25 per cent), which includes EATON, an American-Irish domiciled high-tech industrial, power management, electrification company.

AI is also expected to play an important role in wealth management. Rossbach sees AI as complementing the manager's role, making processes more efficient rather than replacing the human element. He believes that the human touch and judgment will still be needed. The benefits of AI range from automating repetitive tasks, providing data-driven advice in specific areas such as portfolio optimisation, risk management and tax analysis.

History
The organisation oversees assets for the 200-year-old Stern dynasty, with 20 per cent of assets in the World Stars Global Equity strategy from the Stern family and its partners. It traces its origins to a wine merchant family which transformed its business into a bank in 1805 on the counsel of their neighbours, the Rothschild family, who had gone through that transition a few years earlier (coincidentally, the same year that Swiss private bank Pictet was founded). The family flourished, operating across Europe. During the Second World War, the French branch of the family represented by J Stern & Co fled to New York in 1940.  

Whilst in New York, Maurice Stern created an investment strategy of long-term quality stock picking. In 1946, he returned to Paris to rebuild the banking business in Europe, including an asset management business. After being run for two generations, the business, called Banque Stern, was sold in 1988 to Swiss Bank Corporation (now known as UBS). The family created a family office in Geneva for the Stern family. J Stern & Co founded in London in 2012, builds on that legacy. Today, it has established offices in London (2012), Zurich (2014), New York (2023) and Malta (2021).