Last year we launched the Spaceship Earth Portfolio, our first financial product released since the launch of the Spaceship Voyager product in May 2018.
The Spaceship Earth Portfolio is an actively managed fund which seeks to invest in high growth global and Australian companies that meet our trademark Where the World is Going methodology. In creating this new product, we were inspired by the intersection of Where the World is Going and sustainability themes such as climate change, as well as our customers who asked us for a sustainable investment fund.
To celebrate the one year anniversary of the Spaceship Earth Portfolio, we thought it would be worthwhile to reflect on how the portfolio has performed and how the key trends underpinning the portfolio will track going forward.
Spaceship Earth Portfolio one year performance
So far, we have demonstrated that investing sustainably doesn’t necessarily mean you sacrifice returns. We’re pleased to announce that the Spaceship Earth Portfolio has returned 24.75% in the year ending 30 November 2021 and an annualised performance of 27.73% since the Funded Date of 12 November 2020 (12 months).
As always, past performance is not a reliable indicator of future performance and is provided for your information purposes only. Returns are net fees, and not a projection.
The Funded Date represents the date on which the fund was substantially invested in accordance with its investment strategy.
Let’s take a look at some of the top contributors to performance over the last year that have helped drive these results.
Top performers in the Spaceship Earth Portfolio
For your interest, here are the top five performers in the period from when the Spaceship Earth Portfolio launched on 12 November 2020 (the funded date) to 12 November 2021.
Cloudflare (+217%)
Cloudflare is most well known for being a web infrastructure and security company that provides content delivery network (CDN) services and DDoS mitigation services.
The company had been growing rapidly in the last year, reporting a 51% year on year rise in revenue in Q3 21 They have demonstrated their strengths in growing customers and selling more products to their existing customers, with large customers up 71% year on year (YOY) and a net retention ratio of 124%.
But what has really driven positive investor sentiment is their rapid fire product releases, ambitious product roadmap, and how they have leveraged their global network platform to expand in some of the biggest and newest growth areas in software such as edge computing, zero trust and SASE. For instance, Cloudflare recently announced their new R2 cloud storage product and revealed its ambitions to become the fourth cloud provider, taking on the cloud giants like Amazon’s AWS with lower fees.
We believe Cloudflare contributes to Goal 9 (Industry, Innovation and infrastructure) of the UN Sustainable Development Goals agenda. Cloudflare’s mission is to “help build a better Internet”, that’s more secure, reliable and accessible. Cloudflare is also committed to powering its network with 100 percent renewable energy and offsetting or removing all historic emissions associated with powering its network by 2025.
Cloudflare has generated some controversy as it provides free CDN services to 4.1 million customers as at Q3 21, helping them speed up site performance and security, but generally without any vetting of individual websites. We feel Cloudflare can probably do a better job of monitoring abuse but note that they do restrict their services for websites with illegal content or content that goes against their policy.
Nvidia (+124%)
Nvidia is a technology company that creates hardware and software for video games, data centres, automotive and applications of artificial intelligence such as autonomous vehicles and deep learning. They are predominantly known for their invention of the Graphics Processing Units (GPU) in 1999 and their continued technological and market dominance in the space.
Despite supply chain constraints, Nvidia has been continuing to grow at a blistering pace, with revenue up 68% YOY in Q3 Q21. The company has a long growth trajectory ahead of it, particularly in their data centres business, driven by strong demand from big tech customers for high end GPUs required for deep learning and neural networks.
We believe Nvidia contributes to Goal 13 (Climate Action) of the UN Sustainable Development Goals agenda. Nvidia’s GPUs are 42 times more energy efficient than traditional CPU servers, helping to accelerate performance and reduce energy consumption.
Atlassian (+129%)
Atlassian is a global software company specialising in team collaboration and productivity software. They are perhaps best known for their Jira and Confluence products.
Atlassian’s growth continues to accelerate, with revenue up 53% YOY and customer additions up 30% YOY, in 3Q21. They are managing their transition to a cloud based subscription model seamlessly, with cloud making up 52% of total revenue as of 3Q21 and expectations of stronger adoption in the next few years from both new customers and existing on premise customers. Furthermore, they introduced freemium across their entire product line starting during COVID-19, which has helped to accelerate growth.
We believe Atlassian contributes to Goal 13 (Climate Action) and Goal 4 (Quality Education) of the UN Sustainable Development Goals agenda.
Atlassian has committed to running on 100% renewable energy by 2025. This is part of their long-term goal to achieve net-zero emissions by 2050 and fight against global climate change.
Etsy (+113%)
Etsy is a global online marketplace connecting buyers and sellers of handmade goods, vintage items and craft supplies.
Etsy’s growth really took off during the COVID-19 pandemic. In 2019, Etsy’s revenue grew 35.6% YOY before accelerating to 110.9% YOY in 2020. They were a big seller of 2020’s hottest item - face masks, which at one point comprised 14% of Etsy’s gross merchandise sales. While investors were concerned that the company’s growth would slow once the US economy reopened, Etsy defied skeptics, growing 18% YOY on tough 2020 comparables in 3Q21, with habitual buyers being Etsy’s fastest growing segment, up 65% YOY.
We believe Etsy contributes to Goal 12 (Responsible Consumption and Production) and Goal 5 (Gender Equality) of the UN Sustainable Development agenda. In 2019, Etsy was the first global ecommerce platform to offset 100% carbon emissions from shipping.
Generac Holdings (+102%)
Generac is the world’s leading manufacturer of home backup generators for residential and commercial premises. The company also recently entered the market for home solar energy systems and is transitioning towards becoming an energy technology company.
Generac has benefitted from strong demand for its home standby generators due to increased trends of power outage activity across the US and Canada, such as the Texas snow storms and the public utility power shut offs in California recently. There is a substantial backlog for Generac’s home generators (with lead times at around 30 weeks despite three price hikes in 2021) and the company can’t expand manufacturing fast enough to meet demand.
We believe Generac Holdings contributes to Goal 7 (Affordable and Clean Energy) and Goal 9 (Industry, Innovation and Infrastructure) of the UN Sustainable Development Goals agenda.
Generac’s solar and storage integrated home systems enables optimised home energy decisions and promotes low cost renewable energy. Generac’s products also help society deal with the risk of increased power outages. Generac’s commercial generator products service critical infrastructure such as hospitals, schools and data centres, as well as help build grid resiliency.
Cloudflare, Nvidia, Atlassian, Etsy and Generac Holdings performance information is as at 12 November 2021 and relates to the performance period between 12 November 2020 and 12 November 2021.
Looking forward
We believe the trends underpinning the Spaceship Earth Portfolio remain extremely relevant going forward.
Climate change is a more relevant issue than ever. Just a few days ago at the COP26 summit in Glasgow, countries agreed to phase out coal mining, cut methane emissions and protect forests. While regulation by governments may push us away from fossil fuels and towards renewables, climate change is directly impacting people and the planet. The last year has been notable for the number of extreme weather events, which we discussed above with relation to Generac Holdings. It’s not all negative news though, especially with renewable energy technology progressing, enabling lower costs and making solar and wind to become a more viable alternative to fossil fuels.
Furthermore, both consumers and governments are honing in on companies in controversial industries and companies perceived to have negative social impact. For instance, there has been a renewed focus on social media companies, particularly Facebook and potential negative impact from its engagement based business model. While this has not necessarily impacted Facebook’s financial performance so far, it has done damage to the company’s brand and will potentially make it harder for the company to attract employees. Notably, the Chinese government has been cracking down on entire sectors that it believes is doing harm to society whether that is online education companies, gaming companies or companies they perceive as monopolies.
As always, we will continue to research new trends and opportunities. Thank you for supporting us and investing in where the world is going.
The Spaceship Earth Portfolio invests in Cloudflare, Nvidia, Atlassian, Etsy and Generac Holdings. The Spaceship Universe Portfolio invests in Cloudflare, Etsy, and Nvidia. The Spaceship Origin Portfolio invests in Nvidia. Please refer to the Spaceship app or our website for more information on what each portfolio invests in.
Important! We’re sharing with you our thoughts on the companies in which Spaceship Voyager invests for your informational purposes only. We think it’s important (and interesting!) to let you know what’s happening with Spaceship Voyager’s investments. However, we are not making recommendations to buy or sell holdings in a specific company. Past performance isn’t a reliable indicator or guarantee of future performance.
