Top 3 From Across the New Economies
Virtual Reality (+71.33%)
The subsector benefitted from growth in many areas, including augmented reality smart glasses, computer vision, and gaming. Two companies focused on AR-headsets, Vuzix and Microvision, produced very strong performances over the quarter, followed by 3D Systems. Vuzix reported its best quarter in its corporate history and Microvision announced it has made further improvements in its LIDAR technology, which has applications in autonomous vehicles. 3D Systems, which creates VR simulations for medical procedures in addition to 3D printers, announced strong financial results for 2020, and raised guidance for 2021.
Distributed Ledger (+59.57%)
All things crypto surged in Q1; along with the price of Bitcoin, came a focus on NFTs and other uses for blockchain technology, such as for settlement. The biggest individual contributor was Riot Blockchain, returning 213% for the quarter, boosted by continued growth in the number of coins it has successfully mined, coupled with continued rise in the price of Bitcoin. Worth noting, this subsector had a 0.43 correlation to the price of Bitcoin in 2020. Magnachip Semiconductor also contributed, benefitting from a take-private transaction announced on March 26.
Nanotechnology saw strong performance across the subsector, as it was positively impacted by a strong Q1 from the semiconductor and pharmaceutical industry groups. Semiconductor companies saw revenue gains in Q1, possibly driven by the global chip shortage. Vuzix and Luminex Corp were both big contributors, with the latter returning 38.4% for the quarter, as the company reported record revenue for 2020.
Bottom 3 From Across the New Economies
Cybersecurity struggled in Q1, with the malaise in software companies weighing on sector returns, owing to their high valuations and rising interest rates. The biggest detractors were Mimecast and Tenable. The former was a victim of the SolarWinds hack and had some of its source code was stolen. Tenable Holdings issued muted guidance for 2021, citing continued uncertainty from the effects of the pandemic.
Genetic Engineering (-0.95%)
Genetic Engineering was beset by profit-taking and a rotation out of growth stocks in the second half of Q1. The development of COVID vaccines had acted as a tailwind for this group in 2020, and investors appeared to be locking in the resultant gains. Stock-level performance in the subsector tended to be driven by idiosyncratic factors. Precigen and Amicus Therapeutics underperformed as they revealed underwhelming earnings numbers for 2020. Intellia Therapeutics, on the other hand, had a strong Q1, as it presented positive pre-clinical data for its in-vivo treatment of sickle-cell disease.
Future Payments (-2.14%)
Future Payments was impacted by uneven performance from banks and payment processors, as uncertainty weighed on loan balances and transaction volumes. Visa reported a 6% drop in Q1 revenue, driven primarily by falling cross-border transaction volume. Q2 Holdings also reported disappointing earnings, as revenue stagnated and costs increased.