Lion’s Den investor Frank Thelen launches AI ETF | EUROtoday

Admittedly, the launch of his first lively fund may hardly have been more difficult. Shortly earlier than the beginning of the battle in Ukraine, a fast change in rates of interest and all of a sudden icy financing situations for the beforehand celebrated tech shares. Frank Thelen began his fund with the theme “Disruptive Technologies” in autumn 2021 (WKN: DNA10X). The fund fell by greater than 50 p.c by 2023.

Thelen calls it “painful” in an interview with the FAZ. “It was a start with a lot of passion, we then learned a lot and having experienced a crash like that strengthens a team.” Thelen has since renamed his fund firm TEQ Capital. TEQ ought to make it clear that it’s about know-how and equities.

Structures and threat administration had been additionally modified. However, the core concept of ​​the founding concept has remained. “As many people know, I have been investing in start-ups for decades, giving them venture capital and in many cases it has been very worthwhile,” says Thelen. “More and more funds then flowed back to me. But I didn’t want to just invest in young venture companies again. And larger second and third-round investments are not my thing either, and then the question was where do I park my money.”

Thelen based the fund firm 10xDNA, now TEQ Capital, along with Marcel Vogler. “I basically wanted to open my family office, my investment, to others.” Thelen put a whole lot of his personal cash into the primary fund and had the painful experiences talked about: “Stock markets can value companies irrationally for longer,” Thelen remembers the early days in 2022. “As a venture investor, the good thing is that the current valuations are not visible, that you can work in peace,” says Thelen. The investor is satisfied that Lilium, an air taxi start-up and one in all Thelen’s outstanding investments, won’t have gone bankrupt if it had not been listed on the inventory change.

But Thelen desires to proceed to face the mercilessness of the every day inventory market costs. The final two years on the inventory market have meant higher issues for his fund. Most of the losses have been made up once more and those that invested later can also have made first rate income. With the “Small & Mid Cap Technologies” (WKN: DNA10M), a fund was added that additionally loved elevated curiosity from institutional buyers final yr and raised round ten million euros in new cash.

However, Thelen makes it clear that he’ll stay true to his funding type and that clients will know what they’re entering into: “We are not based on the major indices, our focus is not on the Mag 7, investors can do that cheaper with an ETF on the S&P 500,” says the 50-year-old Thelen. “We are people of conviction and bring in all of our technology expertise to identify tech champions off the beaten path and thus offer added value to investors in our funds,” says the investor and tv decide on the present “Lion’s Den,” by which he offers cash to notably attention-grabbing start-ups and invests in them. His giant community from many years in enterprise capital is now additionally serving to the funds.

Thelen is aware of that “real diversification” in funds can typically look very modest for sure durations of time. “But I can sleep very well with it because recent times have shown that we are on the right track.”

Inpost is among the largest positions within the funds: “A super innovative logistics group from Poland, highly efficient when it comes to how people get their packages, but the share price is a disappointment,” says Thelen. A consortium led by the founder additionally thought so and made an preliminary provide to take the corporate off the inventory change. There was no less than a 60 p.c worth improve lately.

Pyrum Innovations’ course acts as if the enterprise mannequin of the outdated tire recycler from Dillingen in Saarland hardly works, says Thelen. “They probably went public too early; young and even smaller companies have a very difficult time there.” But Thelen is satisfied and sticks with it, realizing that it could take some time till his view of the corporate is mirrored within the share worth.

He can also be stunned by the weak share worth of Redcare-Pharmacy, one other firm listed on the inventory change in Germany. “The shop pharmacy, as the largest company asset, doubled sales of e-prescriptions last year, the business model is growing tremendously, we remain patient.” There have already been 5 takeovers within the fund, and as described, a sixth is at the moment underway, which is definitely quite a bit given there are 30 positions within the fund. “We also lost two or three companies,” says Thelen.

Thelen additionally introduced his curiosity in know-how along with the German firm Quantmade, which launched two quant hedge fund certificates with UBS based mostly on mathematical fashions.

An ETF will now be accessible to the broad market from this Monday. The ETF, whose underlying index has been calculated for the reason that finish of 2024, has financed Thelen with a sum of hundreds of thousands. “First of all, this was just created for us privately because we couldn’t find anything that covered the topic of artificial intelligence the way we wanted,” says Thelen. Richard Buschbeck, a health care provider of physics in Thelen’s workforce, was subsequently tasked with constructing one thing that primarily lined “general AI”. “In the past, artificial intelligence was mostly limited to specific areas, but recently the development is moving more and more towards general systems that can solve tasks in very different areas, like a human. This will become the big topic of our generation,” says Buschbeck.

The ETF ought to actively differentiate itself from the Nasdaq-100 and likewise take Europe and Asia, particularly China, into consideration. The result’s a fund based mostly on an index that features as much as 100 firms from 5 classes, of which every firm has a most weight of three p.c within the fund. “In the Nasdaq-100, the ten largest positions make up more than 50 percent, sometimes around ten percent for the largest ones like Nvidia, which we wanted to spread more widely,” says Buschbeck.

The minimal weight is 0.3 p.c. “Of course we also have the big names like Nvidia in here, they are an indispensable part of the topic of AI, but not only, but a broader distribution along the AI ​​value chain and across different company sizes and regions of the world, Europe with ASML and SAP, but also China, Japan, Taiwan and South Korea.” The younger Cologne-based ETF index supplier Naro IQ is the associate along with the Hauck Aufhäuser financial institution. The first yr of the TEQ – General Artificial Intelligence Index introduced a worth improve of 26 p.c, whereas the Nasdaq solely gained 5 p.c in euros.

Why would a satisfied particular person inventory investor like Thelen all of a sudden launch a broadly diversified ETF? “The topic of artificial intelligence is so big, the technological development is so rapid and the market participants are so diverse. In order to reflect the topic holistically, we don’t even try to distinguish winners and losers every day and prefer to take a rule-based index approach, because the categories of companies that will benefit from general AI are already clear today,” says Thelen. The guidelines of the index are clear; twice a yr all values ​​are reset to the vary of 0.3 to 3 p.c weight (re-balancing). Samsung is at the moment the strongest worth with a 4.2 p.c index share.

With a price of 0.69 p.c per yr, the ETF with the safety identification quantity A41AXG is within the regular vary for theme ETFs and is less expensive than Thelen’s actively managed funds, which price as much as 1.8 p.c per yr. Around 80 million euros are at the moment invested there, the proportion {of professional} buyers is growing and is now at 20 million euros. Mike Judith, an skilled fund skilled, has been on board since summer time 2024. He has managed gross sales at Norway’s largest fund firm DNB for a few years and picked up billions of euros there. Bonn-based TEQ Capital nonetheless has an extended technique to go till then.