26th November 2013
Following Twitter’s recent floatation on the New York Stock Exchange and growing consumer demand for iPads, Kindles and smart phones, investor appetite for technology stocks is on the up writes Philip Scott.
In a poll run by Barclays Stockbrokers between 11 and 25 November, almost three-quarters of respondents, at 72% asserted that they are interested in investing in technology firms. This includes nearly a third, at 30%, who said that tech stocks are already part of their portfolio and 13% who have either recently invested, or increased their holdings in the sector.
An additional 29% said they are interested in investing in technology stocks but that they are not currently part of their portfolio.
Separately, just over a quarter at 28% of respondents said technology stocks do not interest them at the moment.
Alastair Thaw, head of client engagement and proposition at Barclays Stockbrokers says: “The appetite of clients currently either investing in or considering investment in the technology sector is strong. As technology companies continue to launch new smartphone and tablet devices, those investing in the sector will no doubt be monitoring it closely to identify interesting opportunities.”
Additional analysis from Barclays Stockbrokers highlights clients’ appetite for investing in the technology sector during Twitter’s IPO. On 7 November, the day of its stock market debut, Barclays Stockbrokers’ International Trader platform’s overall trading volumes were up by 79% compared to the previous day, making it the single busiest trading day on the platform of 2013. Twitter accounted for over a third, at 34% of all trades placed on Barclays Stockbrokers’ International Trader platform that day.
Top fund picks
Previously many investors were burnt, many badly so, as a result of putting too much faith in tech stocks. At the turn of the century the so-called ‘dotcom boom’ was in full swing on the back of what many were referring to as the ‘new economy’. Thousands of investors ploughed millions into technology funds and stocks only to see their cash decimated when the sector imploded in 2001. Many tech giants such as Google and Amazon managed to find their way through the storm but hundreds of other internet and tech start-ups vanished after the collapse.
But technology funds have been making a quiet comeback, and over the past five years the average Technology & Telecoms portfolio has delivered a significant return of 158% while in contrast the typical Global equity portfolio has achieved 82% over the same period.
For investors looking for a wider technology investment, Hargreaves Lansdown recommends GLG Technology Equity. Managed by Anthony Burton and Phil Pearson, the portfolio has investments in the likes of tech giants including Apple, Facebook and ARM Holdings, and has achieved a substantial 180% return for its investors over the past five years.
Ben Yearsley head of investment research at Charles Stanley Direct also backs the fund. He says: “It is a high-conviction approach that allows each holding to contribute to performance but does increase risk. I believe Mr Pearson and Mr Burton are capable of generating attractive returns from the sector over the long term, so this fund could be considered by adventurous investors seeking exposure to this specialist area. It remains part of our Foundation Fundlist of favourite funds.”
Andy Parsons, head of investment research & advisory services at The Share Centre tips Henderson Global Technology, which is run by Stuart O’Gorman. The fund has investments in Google, Visa, Cisco and Apple and over the past five years, has delivered a return of 129%.
But investors looking to dive into tech need to note that the sector is a highly specialised and potentially volatile one, and should only account for a small percentage of an overall well diversified portfolio.