Digital Twins

This basket targets the digital twins theme, which creates virtual replicas of physical assets, systems, or processes synchronized with real-time data from sensors and IoT to enable simulation, predictive maintenance, optimization, and accelerated innovation across product lifecycles. It holds 20 names with an effective N of 13.1, providing concentrated exposure while spanning software, semiconductors/EDA, industrial IoT, infrastructure engineering, and related technology sectors. The investment logic rests on explosive market growth—the global digital twins market is projected to expand from approximately $34 billion in 2026 to over $380 billion by 2034 at a 35%+ CAGR—driven by AI integration, industrial digitization, and demands for efficiency in manufacturing, infrastructure, automotive, and electronics. Companies in the basket deliver the core software platforms, simulation tools, and connectivity layers powering these virtual models.

Key risks include heightened cybersecurity vulnerabilities, as digital twins expand attack surfaces through constant bidirectional data flows between virtual and physical systems, raising threats of IP theft, malware, ransomware, and unauthorized access that could disrupt operations or compromise safety-critical assets. Integration challenges with legacy systems and reliance on accurate, real-time sensor data also pose execution risks amid rapid technological evolution. The highest-conviction position is Bentley Systems at 18.3% weight with a 90 exposure score, as the company leads in infrastructure digital twins via its iTwin platform and comprehensive engineering software suite, directly capturing owner-operator demand for lifecycle optimization in a $13+ trillion ESG infrastructure market where 88% of mining organizations already recognize high value in such solutions.