Market News

U.S. equity markets finished the week down, as technology shares continued to face pressure. Weakness in SaaS stocks persisted, with the iShares Expanded Tech-Software ETF (IGV) now down approximately 30% from its highs reached last October, underscoring the severity of the rotation out of high-multiple software names. The MARP portfolio is “overweight” software. However, we view companies like Autodesk—whose AutoCAD and Revit platforms are foundational to the global construction industry—and Shopify, which equips small and medium-sized merchants with enterprise-grade commerce capabilities, and Axon who generates the vast majority of its revenue from government customers — primarily U.S. federal, state, and local law enforcement agencies—as unique and highly defensible platforms that serve a broad and diverse set of industries. We are attracted to these businesses because of their combination of growth, profitability, financial position, and competitively advantaged business models. That said, particularly during periods of market stress, stock performance across the software ecosystem can be highly correlated. Over the long term, we expect artificial intelligence to impact every company in the MARP portfolio—creating challenges outlined by Goldman Sachs and others. But it will also provide meaningful opportunities to expand addressable markets, create value for their customers, and potentially improve operating margins.