Following the much-publicised bursting of the 'dot.com' bubble in 2000, many investors have understandably ignored technology funds as being part of their investment portfolio. Catastrophic losses followed unprecedented excitement around a new sector that promised so much yet ultimately delivered, for some, almost nothing.
Technology funds became a victim of their own success in a very short space of time, in January 1999 investors put just GBP5m into technology funds, in January 2000 they attracted GBP238m (source: Investment Management Association (UK)). The future value of technology equities was vastly over estimated, and when these expectations were not met, the industry duly collapsed.
However, anybody that has kept a close eye on the development of technology funds since 2000 will know that it now represents a very real, if not relatively unknown, investment opportunity (the Lipper Science and Technology Funds sector average returned 69.31percent in 2009). Learning from the mistakes of a decade ago, technology companies started focusing on profits and cash flows rather than just revenue growth, so much so that the technology sector is now in very healthy financial shape, with either little or no balance sheet debt. More importantly, valuations based on technology companies represent an honest reflection of future worth, unlike they did 10 years ago.
Whilst the sector didn't escape the effects of the recent global recession, it has emerged relatively unscathed owing to an almost unique appeal to both retail and business markets. Consumers' seemingly insatiable appetite the latest technology gadgets; mobile phones, multi media and gaming consoles, plasma and LCD TVs etc., coupled with need for IT infrastructure solutions to accommodate the rapid growth of many financial centres based in emerging market economies, has served as a regular and diverse income stream for many new and established technology firms.
From innovative smartphones to 'tablet' computers and 3-D TV, technology consumers and investors have a lot to look forward to in 2010 and beyond. Warren Tennant, manager of the Hansard Invesco Global Technology fund (MC23, available in both HIL and HEL) has greater confidence in the medium-term outlook and continues to be encouraged that the coordinated global stimulus will positively affect the global economy. Going forward, he sees the possibility for improvements in credit markets, stabilisation of demand patterns and conditions for secular growth. And have consistently highlighted the long-term positive trends for technology in the team outlook.
Hansard has a variety of fund links across a diverse range of asset classes, whether your clients have a conservative, balanced or adventurous outlook. To find out more about any of our fund links please contact your Hansard Account executive who will be able to assist you further.
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