Which Tech Funds Deliver?

The biggest and best technology funds on the market, top rated by Morningstar analysts and favoured by UK investors

Samuel Meakin 22 July, 2016 | 8:00AM
Facebook Twitter LinkedIn

A significant proportion of the active money managed in the technology sector is under the stewardship of a relatively small number of established teams.

3 Biggest Tech 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. The fund is rated Silver by Morningstar.

Franklin Technology is managed by John Scandalios, who is based in California, US. The fund employs a bottom-up, fundamental research approach to investment, and seeks to invest in growth companies. Company characteristics sought include strong market positions, high or increasing profit margins, strong returns on capital investment, and quality management teams. The fund will invest lower down the market-cap scale as well as in larger, established technology companies.

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 companies lower down the market-cap scale with strong growth prospects. The fund is rated Bronze by Morningstar.

Strong Performers over Three Years

The funds listed here are amongst the top performers in the technology sector over the last three years.

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.

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.

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.

Facebook Twitter LinkedIn

About Author

Samuel Meakin  is a fund analyst for Morningstar