A New Era Emerges: The Age of Connected Intelligence

INSIGHTS 4/4

This is significant because it speaks to the incredible investment opportunity that these innovators may have, given that the market capitalization that accretes to the disruptors should be, in our view, at least as large as that which is lost by the disrupted companies (see Figure 2). We are in a new world. Uber is the world’s largest taxi company but owns no vehicles. Facebook, the world’s most popular media owner, creates no content. One of the

world’s most valuable retailers, Alibaba, has no inventory and Airbnb, the world’s largest accommodation finder, owns no real estate. These companies are eliminating the middleman or reducing costs through other business model changes and in the process they are changing or destroying whole industries. They highlight how important it is to be on the right side of change when investing in such dynamic environments. Growth and Change in This New Era While many investors are focused on what the Fed will do next and where we are in the economic cycle, at Alger we are deploying our resources to understand how the longer and more powerful technological revolution will play out over the next decade or more. We believe that the Age of Connected Intelligence will usher in more change than ever before, creating winners who gain large amounts of market share or even forge new markets. By the same token, we believe that a large portion of the current stock market capitalization is at risk of being disrupted. The complexion of the market is changing and we are excited to embrace the investment opportunities of the revolution.

Figure 2: Are You Disrupting or Being Disrupted?

DISRUPTED $7.6 trillion

DISRUPTERS $3.3 trillion

Source: Alger, market capitalization of companies in the S&P 500, as of 6/30/19.

AUTHORS

Dr. Ankur Crawford , is Executive Vice President, Portfolio Manager Patrick Kelly, CFA , is Executive Vice President, Portfolio Manager, Head of Alger Capital Appreciation and Spectra Strategies Brad Neuman, CFA , is Senior Vice President, Director of Market Strategy The views expressed are the views of Fred Alger Management, LLC (FAM) and Alger Management Ltd. (together with their affiliated entities “Alger”) as of October 2019.Alger has used sources of information which it believes to be reliable; however, this publication is not intended to be and does not constitute investment advice.These views are subject to change at any time and they do not guarantee the future performance of the markets, any security, or any funds managed by Alger. Risk Disclosures: Investing in the stock market involves certain risks, and may not be suitable for all investors. Growth stocks tend to be more volatile than other stocks as their prices tend to be higher in relation to their companies’ earnings and may be more sensitive to market, political, and economic developments. Past performance is not indicative of future performance. Investors whose reference currency differs from that in which the underlying assets are invested may be subject to exchange rate movements that alter the value of their investments.Technology and healthcare companies may be significantly affected by competition, innovation, regulation, and product obsolescence, and may be more volatile than the securities of other companies. Short sales can increase market exposure, magnifying losses and increasing volatility. Important Information for US Investors: This material must be accompanied by the most recent fund fact sheet(s) if used in connection with the sale of mutual fund shares. Fred Alger & Company, LLC serves as distributor of the Alger mutual funds. Important Information for UK Investors: The distribution of this material in the United Kingdom is restricted by law.Accordingly, this material is provided only for and is directed only at persons in the United Kingdom reasonably believed to be of a kind to whom such promotions may be communicated by an unauthorized person pursuant to an exemption under the Financial Services and Markets Act 2000 (Financial Promotion) Order 2005 (the“FPO”). Such persons include: (a) persons having professional experience in matters relating to investments and (b) high net worth bodies corporate, partnerships, unincorporated associations, trusts, etc. falling within Article 49 of the FPO. Most of the rules made under the FSMA for the protection of retail clients do not apply, and compensation under the United Kingdom Financial Services Compensation Scheme will not be available. Important Information for UK and EU Investors: This material is directed at investment professionals and qualified investors (as defined by MiFID/FCA regulations). It is for information purposes only and has been prepared and is made available for the benefit investors.This material does not constitute an offer or solicitation to any person in any jurisdiction in which it is not authorised or permitted, or to anyone who would be an unlawful recipient, and is only intended for use by original recipients and addressees.The original recipient is solely responsible for any actions in further distributing this material and should be satisfied in doing so that there is no breach of local legislation or regulation. Certain products may be subject to restrictions with regard to certain persons or in certain countries under national regulations applicable to such persons or countries. Alger Management, Ltd. (company house number 8634056, domiciled at 78 Brook Street, LondonW1K 5EF, UK) is authorised and regulated by the Financial Conduct Authority, for the distribution of regulated financial products and services. FAM and/or Weatherbie Capital, LLC, U.S. registered investment advisors, serve as sub-portfolio manager to financial products distributed by Alger Management, Ltd. Alger Group Holdings, LLC (parent company of FAM) and Fred Alger & Company, LLC, are not authorized persons for the purposes of the Financial Services and Markets Act 2000 of the United Kingdom (“FSMA”) and this material has not been approved by an authorized person for the purposes of Section 21(2)(b) of the FSMA. S&P 500®: An index of large company stocks considered to be representative of the U.S. stock market. Investors cannot invest directly in any index. Index performance does not reflect deductions for fees, expenses or taxes. Note that comparing the performance to a different index might have materially different results than those shown.The performance data quoted represents past performance, which is not an indication or a guarantee of future results. The following positions represented the noted percentages of Alger assets under management as of July 30, 2019: Facebook, Inc., 2.99%; Salesforce.com, Inc., 2.88%; Alphabet, Inc. 2.45%; Alibaba Group Holding LTD ADR, 0.89%; Airbnb 0.00%; Uber Technologies, Inc., 0.00%.

Fred Alger Management, LLC 360 Park Avenue South, New York, NY 10010 / 800.223.3810 / www.alger.com

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