Biggest and Best Tech Funds

Despite their longer-term underperformance as a whole relative to the benchmark, analysts believe there is a place for active managers within the technology sector

Samuel Meakin 5 August, 2015 | 4:24PM
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3 Best Based on Three-Year Performance

HyunHo Sohn became the sole manager of the Fidelity Global Technology fund at the end of October 2013. He had been co-manager since March 2013 and his involvement with the strategy dates back to 2011, when he was conducting research on global technology stocks. He has also managed an internal global technology fund since May 2011. Value-chain analysis is the cornerstone of the manager’s investment process, in which he buys companies that he believes are best able to profit from a particular product’s life cycle, from those producing component parts right through to those selling the finished product. Although not unique, we believe this to be an interesting approach that is considered and robust. More importantly, we believe Fidelity has the personnel in place to resource adequately the manager’s research-intensive process.

The DNB Technology fund is run by a team headed by Anders Tandberg-Johansen. The team looks for the long-term trends affecting the sector in order to identify the companies that are best positioned to benefit from these trends. Evaluation of a company’s management and its track record is a key part of the investment process, and other company attributes sought by the team include barriers to entry, scale and product demand.

The JPM Europe Technology fund is managed by the Dynamic team at JPMorgan led by Jonathan Ingram. The approach focuses on three primary factors: momentum both price and earnings, value, and quality. The process also draws on JPMorgan’s behavioural finance model with the intention of capitalising on investors’ behavioural biases.

3 Largest Technology Funds

Henderson Horizon Global Technology is managed as a primarily large-cap, benchmark-aware offering by Stuart O’Gorman. Mr. O’Gorman is a highly experienced technology investor whose approach has delivered attractive absolute and relative performance over the past ten years. We have high conviction in his thematic approach, combined with his risk awareness at the portfolio construction stage of the process. This has led to significant level of investment into the fund, which is the largest fund in the sector, but the manager is able to cope with the fund’s scale due to the greater focus on giant- and large-cap stocks than many of its peers.

Polar Capital Global Technology stands out due to the high quality of its investment team. Nick Evans and Ben Rogoff are seasoned investors with a keen understanding of technology markets and strong expertise in combining company research with their short- and longer-term expectations for the industry’s development. Their approach is characterised by the belief they can add value by investing in companies offering new and disruptive technologies. This results in a process that combines thematic analysis to identify the growth areas of the industry with rigorous bottom-up company analysis. The investment philosophy leads to a bias towards smaller-cap companies with strong growth prospects.

Mark Hawtin has managed the GAM Star Technology fund since launch, having joined GAM in 2008 from Marshall Wace, where he built an impressive track record running a TMT hedge fund. Mr. Hawtin’s experience in the sector, coupled with his ability to be reactive to information and nimble in constructing the portfolio, are key to Morningstar’s constructive view on the fund. His process begins with identifying compelling trends in the sector and looking for industry “game changers”. The manager is willing to back his ideas with high levels of conviction, and he will also reach down the market-cap spectrum. This can lead to a volatile performance profile, as demonstrated by returns in 2014, but the fund has comfortably outperformed the peer group average and the MSCI World Information Technology index since its inception.

The information contained within is for educational and informational purposes ONLY. It is not intended nor should it be considered an invitation or inducement to buy or sell a security or securities noted within nor should it be viewed as a communication intended to persuade or incite you to buy or sell security or securities noted within. Any commentary provided is the opinion of the author and should not be considered a personalised recommendation. The information contained within should not be a person's sole basis for making an investment decision. Please contact your financial professional before making an investment decision.

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Samuel Meakin  is a fund analyst for Morningstar

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