The financial landscape is ever-evolving, and investment strategies must adapt to current market realities. One notable shift has come from the Blue Whale Growth fund, which is significantly backed by billionaire Peter Hargreaves. Recently, the fund made the strategic decision to divest its complete stake in Facebooks parent company, Meta Platforms, a move driven by apprehensions over an impending global economic slowdown attributed to U.S. tariffs announced by former President Donald Trump.

Stephen Yiu, the fund manager of Blue Whale Growth, expressed his rationale behind this decision in an interview with the Financial Times. He clarified that this decision to exit from Meta was made shortly after Trumps controversial tariffs were unveiled on April 2, a date Yiu referred to as liberation day. The tariffs, which impose additional costs on imports, have sparked concerns regarding a potential downturn in the global economy. Yiu emphasized that such a slowdown could have dire implications for Meta's core business model, particularly its revenue streams from digital advertising.

When you have a global business in digital advertising and a global slowdown and economic uncertainty, then it does impact the top line [revenues], Yiu stated, articulating the challenges facing Meta and similar companies in an increasingly volatile market.

The Blue Whale Growth fund, which currently manages assets valued at approximately 1.1 billion, has a significant focus on technology stocks, which make up nearly 40 percent of its portfolio. While Meta represented about 3 percent of the funds investments, this decision reflects a broader trend among investors reevaluating their positions in the technology sector amidst shifting economic conditions.

Looking back, Yiu noted that the fund had previously held Meta shares for four years before selling them in January 2022. Interestingly, they re-entered the market for Meta shares again in October 2023, a testament to the fund's active management strategy in response to market signals.

In a similar vein, the Blue Whale Growth fund has also completely divested from Microsoft. Yiu cited concerns about the technology giant's heavy spending in artificial intelligence (AI), suggesting that this expenditure might soon surpass its revenue generation capabilities. The fund manager began to aggressively sell Microsoft shares towards the end of the previous year, highlighting a cautious approach to investment in large-cap tech stocks.

Conversely, Yiu has recently increased his holdings in Nvidia, a leading U.S. chip designer. He noted that the companys shares had experienced a tumultuous period over the past year, particularly after competition emerged from a Chinese firm, DeepSeek, which developed a cost-effective AI model. Despite these challenges, Yiu has taken advantage of a decline in Nvidias stock price, increasing its representation within the fund from 7 percent at the end of last year to 10 percent currently.

Nvidia has faced additional headwinds this week as the company announced new U.S. restrictions affecting American chipmakers' sales to China. This development could potentially impact Nvidia's earnings by as much as $5.5 billion. However, Yiu remains optimistic, stating, While the [U.S. controls] will pose short-term headwinds, Nvidia remains well-positioned to capture the increasing AI spending in both enterprise and consumer applications. He concluded by noting that the ongoing AI competition between the U.S. and China is poised to be a critical development to watch in the coming years.

Hargreaves, who co-founded the renowned investment platform Hargreaves Lansdown, has seen his family's investment in the Blue Whale Growth fund grow to an estimated 200 million. Since its launch in 2017, the fund has garnered attention for its focused investment strategy.

Interestingly, as the situation unfolds, individual investors have shown a keen interest in some of the largest technology stocks in the U.S., often referred to as the Magnificent Seven. This group includes industry giants such as Alphabet (the parent company of Google), Amazon, Apple, Meta, Microsoft, Nvidia, and Tesla.

Data from Interactive Investor, one of the UKs major retail investment platforms, indicated that on April 7, trading volumes hit an all-time high, with a noticeable trend of more purchases than sales among its customers. Notably, Nvidia and Amazon emerged as some of the most actively bought stocks during the first half of April, along with significant UK stocks like BP, Rolls-Royce, and Legal & General.

Furthermore, Hargreaves Lansdown reported that its customers have remained net buyers of the Magnificent Seven stocks since the initiation of Trump's tariffs, which now comprise nearly a third of the S&P 500 by market capitalization. Another investment platform, AJ Bell, observed an uptick in interest for the Polar Capital Technology Trust, which has substantial holdings in Nvidia, Meta, Microsoft, and Apple, underscoring the growing appeal of tech stocks since April 2.