Funds invested in AI, technology and life sciences outperform

Some of the best performing equity funds this year achieved success by paying attention to the rise of artificial intelligence and breakthroughs in life sciences and technology, leading fund managers say.

“Our fund has benefited from exposure to some of the most powerful structural changes taking place in the global economy, particularly the advancement of AI, cloud computing, semi-conductors and digital infrastructure,” says Florence Narine, head of investment solutions at IG Wealth Management.

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“These aren’t simply short-term trends. Technology is fundamentally changing how businesses operate, how industries compete and how value is created across the economy. The fund provides investors with exposure to companies at the centre of that transformation.”

IG Mackenzie’s Global Science and Technology Fund Series F is the winner of a 2026 Lipper Fund Award in the sector equity category for three-year performance. The LSEG Lipper Fund Awards offer an independent and uncompromised assessment of fund performance in more than 20 countries, including Canada, over a performance timespan of three, five and 10 years.

Chris McHaney, manager of another winner, the Global X Big Data and Hardware Index exchange-traded fund (ETF), agrees that AI and other tech trends are likely to be long-lasting.

“One of the biggest investment themes in recent years has been AI and the companies that power it. Behind every breakthrough is a need for more computing power, memory and storage. Our fund’s exposure to those businesses has been a real source of strength,” says Mr. McHaney, executive vice-president and head of investment management and strategy at Global X, whose fund won in Lipper’s sector equity category for three-year performance.

The CI Munro Global Climate Leaders’ Fund Series FH, which won in Lipper’s global equity category for three-year performance, takes a slightly different approach to technology, says James Tsinidis, a partner at Munro and a portfolio manager of the fund.

“The fund invests in a concentrated portfolio of structural growth companies positioned to benefit from increasing investment in decarbonization and electrification,” he says.

“In the 20 years leading up to 2020, there was significant underinvestment in electricity infrastructure, particularly in the United States. This decade, demand has stepped up sharply, driven by electric vehicles, the electrification of buildings, data centre and AI infrastructure build-out, and the reshoring of manufacturing to the U.S.

“After two decades of underinvestment [in electricity infrastructure], supply hasn’t kept up, so the companies that provide this equipment and these services are now having to expand capacity quickly. Munro estimates that approximately US$50-trillion to $100-trillion will need to be invested over the coming decades, across numerous sectors and industries. This has created an inflection in growth.”

Innovation sectors are some of the prime engines of the global economy where considerable economic wealth has been created, explains Marcello Montanari, managing director and senior portfolio manager of North American Equities at RBC Global Asset Management Inc.

“The U.S. dominates many of these sectors so RBC Life Science and Technology Fund, Series F, is U.S.-focused,” he says. The fund is a Lipper Fund Award winner in the U.S. equity category for 10-year performance this year.

Another RBC fund, the RBC Quant EAFE Dividend Leaders ETF, was a winner in Lipper’s international equity category for three-year performance. Oliver McMahon, its manager, says RBC takes a “stalwart and optionality” approach to investment.

“It’s a longer-term, get-it-right-sit-tight, approach with relatively low turnover. We marry up large consistent compounders (stalwarts) with baskets of smaller names (optionality) that we believe offer interesting investment prospects,” adds Mr. McMahon, senior portfolio manager of quantitative investments at RBC Global Asset Management Inc.

“Depending on market conditions, we toggle the relative weights of the stalwarts and optionality basket.”

The winning fund managers agree that the outlook for the coming months remains, as it has been for some time, both volatile and uncertain.

The managers of the TD Science and Technology Fund, F Series, a Lipper winner in the sector equity category for three-year performance, say there are three key areas they are monitoring that could influence equity markets in the coming months.

“These are: ongoing geopolitical tensions, which have contributed to higher oil prices; interest rates and the path of inflation; and the pace of investment, infrastructure requirements [of data centres] and eventual monetization of AI,” they said in a statement.

The long-term outlook remains constructive, say managers at JP Morgan, which manages the NBI Innovators Fund Advisor Series, which won in Lipper’s global equity category for 10-year performance.

“The innovation pipeline is deep, and corporate earnings continue to be driven by new products, emerging technologies and evolving business models,” they said in a statement.

“Over time, we expect productivity gains from technological innovation, particularly artificial intelligence, to be reinvested across the economy, supporting stronger growth and expanding profit opportunities,” JP Morgan said.

“Interest rates are elevated, valuations have expanded, and macroeconomic uncertainty remains high. JP Morgan remains positive on the companies enabling AI technology but believes the next phase of value creation is likely to come from adoption rather than infrastructure alone.”