How a Prominent Fund Manager Dodged 2026’s Software Stock Rout

Rajiv Jain wasn’t alone. Other investors had warned about what they considered overly optimistic expectations for many technology stocks well before Anthropic’s early-February announcement of enhanced artificial intelligence capabilities sent software stocks—and others—reeling. But few mutual fund managers matched the boldness of Jain’s proclamations or the decisive portfolio shifts enacted by Jain and his team at GQG Partners.

That contrarian stance has been rewarded—finally. Even with some backsliding last week, GQG US Select Quality Equity GQEIX and GQG Global Quality Equity GQRIX ranked near the top of their respective Morningstar Categories for the year to date through Feb. 20, 2026. That’s quite a contrast with 2025, when both funds scraped the bottom of their categories.

Frenzy Trade Mania?

Of course, it’s much too soon to declare victory. And when Jain visited Morningstar’s Chicago office on Feb. 3, he did not do so. Instead, in a discussion with Morningstar manager research analysts, he reiterated and expanded upon the assertions laid out in a series of GQG research papers published last fall. These reports, provocatively titled “Dotcom on Steroids,” explained in detail why GQG considered the “AI frenzy trade mania” more dangerous for investors than the notorious tech bubble of the late 1990s.

The research papers featured detailed reasoning and supporting data—too much to recount in full here. But the core argument was straightforward. The growth rates of the former Magnificent Seven stocks no longer seemed exceptional, resulting in unrealistic valuations. The same applied to other high-flying tech stocks. Owning them would expose GQG’s funds to steep meltdowns. Jain and his team found much more compelling options in less-glamorous parts of the market.

No Half Measures

Acting on their convictions, Jain and team sold down GQG’s tech holdings. In its Sept. 30, 2025, portfolio (the latest publicly available), GQG’s US-focused fund owned only two of the Magnificent Seven—relatively modest stakes in Microsoft MSFT and Meta Platforms META—and it wouldn’t be surprising if those two are missing when the December portfolio comes out. (Neither stock appeared in the Feb. 20 portfolio of GQG’s similar exchange-traded fund GQGU.)

Jain didn’t shift to other choices in the technology sector, either. According to Morningstar’s classifications, the entire tech weighting in the US fund’s September portfolio was less than 3%, a far cry from the category average of roughly 30%. Instead, the top of the portfolio featured hefty weightings in Philip Morris International PM, AT&T T, Cigna CI, and other firms from those sectors—many of which have risen nicely this year—as well as several utilities. (In his Morningstar visit, Jain emphasized that GQG’s utilities are not the ones touted as data center plays.) In Jain’s view, such noncyclical stocks had reliable, stable growth prospects, while trading at historically low valuations—the opposite of the AI-related tech companies.

In a follow-up report on Jan. 21, 2026, GQG’s team emphasized that it had reexamined its views to ensure it had not erred in taking such an uncompromising stance against tech stocks. The team decided to stand firm. It declared in the report that examining the data “makes it nearly impossible to embark on the hype and underwrite the level of spending and valuations that we think are simply unsustainable.”

Not a Luddite

These moves are particularly noteworthy because Jain is no technophobe. As recently as June 30, 2024, five of the US fund’s top eight holdings were members of the then-Magnificent Seven. (Broadcom AVGO was there, too.) At that time, Jain even made Nvidia NVDA the third-largest holding in GQG’s emerging-market fund, with ASML ASML and Broadcom also in the top five.

Even now, Jain doesn’t dismiss all the Big Tech names. He thinks Nvidia will be a winner in the AI transformation, and Taiwan Semiconductor Manufacturing TSM appeared in the September 2025 portfolios of GQG’s international, US, and emerging-market funds. In the latter, it took the top spot, with 9% of assets.

The tech-heavy approach of mid-2024 hadn’t been in place forever, though. In fact, just a few years earlier, Jain had exited the technology sector as quickly and decisively as he did this time.

In that shift, energy stocks received most of the proceeds.

Exchanging tech for energy paid off. In 2022, tech stocks plunged, but GQG’s US fund lost just 2.7%, while the category average fell 17.0%. The global fund provided even more of a cushion; it dropped a mere 3.7%, while the category average sank a painful 27.9%.

Work in Progress

Market sentiment can change in a flash. It remains to be seen if GQG’s contrarian stance will continue to reward shareholders as it did in 2022.

And there’s another reason for GQG not to proclaim victory; its emerging-market fund has not participated. After a 99th-percentile rank in its category in 2025, GQG Emerging Markets Equity GQGIX sat in the 82nd through Feb. 20 this year. In that fund, avoiding the big US tech names has provided little benefit, and in both 2025 and early 2026, returns were held back by favoring India over China and avoiding Korea’s soaring SK Hynix and Samsung Electronics.

Fitting a Pattern

Jain has never shied away from taking bold bets reflecting his convictions. In fact, this is just the latest of several drastic portfolio shifts that he’s made during his three decades in fund management. The record shows that his unconventional approach usually pays off. That does not guarantee this one will pan out long term.

That said, Jain’s antitech stance may not be around even medium term. One thing we know for sure: If company valuations and growth prospects change, Jain will not hesitate to act.