The history of government funding innovation is extensive and has been a driving force behind technological advancements in various sectors. Government funding, particularly in the form of contracts and support from intelligence and defense agencies, can play a pivotal role in fostering innovation. A notable recent example is Palantir Technologies Inc. (PLTR), a company that specializes in big data analytics and is one of the recent rising stars in the AI theme, with remarkable year-to-date performance of over 200% USD. In its early years, PLTR developed its technology through computer scientists and analysts from intelligence agencies, with early investments from the NSA, the FBI, and the CIA.
As an AI player with revenue streams tied to the defense industry, PLTR finds itself in both the MarketVectorTM Global Defense Industry Index (MVDEF) and the BlueStar® Artificial Intelligence Index (BAIPR). Despite defensive and AI themes yielding a similar outstanding 38% USD return over the last 12 months, their trajectories to get there differ. MVDEF achieved its gains steadily, with a one-year volatility of 15%, while BAI navigated a more dynamic path with a one-year volatility of 24%.
Index Cumulative Return ending November 28, 2023
Source: MarketVector. Data as of November 28, 2023.
Companies within the defense industry, historically considered defensive investments, have shown resilience during periods of geopolitical turmoil. In navigating the complex interplay of innovation, geopolitical dynamics, and market volatility, a strategic combination of defensive and high-tech stocks can pave the way for a resilient and forward-looking investment approach.
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Joy Yang is the Head of Product Management and Marketing at MarketVector. She is responsible for managing MarketVector products and services to accelerate innovation in financial index design and adoption. Joy brings more than 25 years of investment experience to MarketVector, having led teams delivering index and quantitative-active investment solutions at Arabesque Asset Management, Dimensional Fund Advisors, Vanguard, Aberdeen Standard Investments, AXA Rosenberg, and Blackrock. She has an MBA from the University of Chicago Booth School of Business and a Bachelor of Science in Electrical Engineering from Cooper Union’s Albert Nerken School of Engineering.
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