Investing in Technology 2 – The Growth Continues

Disclaimer

This article is for general information and educational purposes only. It does not constitute investment advice, a personal recommendation, or a financial promotion within the meaning of the Financial Services and Markets Act 2000

Readers should make their own independent assessment and where appropriate seek advice from an FCA authorised advisor.

Part 1 Research

Here we review the eight major companies activity and their share price performance.

Largest Global Technology Companies

Company                                       Main Business       

Nvidia                                      AI chips & accelerated computing.

Apple                                      Consumer devices & services.

Alphabet (Google)             Search, cloud, and AI.

Microsoft                               Software, cloud, and AI.

Amazon                                 E commerce & cloud computing.

Meta Platforms                    Social media & AI advertising.

Taiwan Semiconductor     Semi-conductor manufacturing.

Samsung Electronics         Memory chips & electronics.

What Investors should notice

• The sector winner was not necessarily the biggest company Nvidia delivered by far the strongest share price because it became the principal supplier of processors powering the AI revolution.
• AI is driving much of the sector performance.
• Tech companies are not all equal. Speciality and timing matters.
• Valuations of several excellent businesses now show modest gains because future growth is already factored in.
• Winners can change. 20 years ago, they were Intel, Cisco and IBM, now leadership continues to evolve.

Technology continues to benefit from powerful long-term trends.

• AI.
• Cloud computing,
• Data centres.
• Digital payments.
• Software automation.
• Semi-conductor demand.

Part 2 Investment Choices Update

Specialist Technology Funds

The information below is taken from one platform provider’s technology fund listings and published research on these funds.

The following is therefore a guide to the potential information available to Technology fund investors.

You should do your own research before investing.

Shown in bold print are the latest fund price performance figures for the 2 months April & May 26, of the specialist funds exampled our first post.

A Tracker Fund

Legal & General Global Technology Index C Acc

This funds’ investments are mainly in the shares of those companies that make up the FTSE World Technology Index in proportion to each companies size. The fund aims to track this index and therefore has more holdings than an actively managed fund. It also has more invested in US companies.

Key fund data. Launched 2000. Size £4,404 million. Holdings 251. Top countries US 81%, Taiwan 8%, Japan 3%

Performance

5 Year cumulative +132%, March 25/March 26 +28%.

2 months April & May 26   + 27 %

Two Actively Managed Funds

Actively managed fund managers are free to invest in those countries and companies that they feel will give them the best returns. This is a different brief to tracker fund managers who invest to replicate the appropriate index.

Polar Capital Global Technology 1 GBP Income

Key fund data. Launched 2001. Size $11,833 million. Holdings 66. Top countries US 63%, Taiwan 11%, South Korea 5%.

Performance

5 Year cumulative +146%, March 25/ March 26 +85%.

2 months April & May 26   + 24 %

CT (Lux) Global Technology ZG GBP Accumulation

Key fund data. Launched 2016. Size $1,165 million. Holdings 66. Top countries US 90%, Japan 3%, Israel 2%.

Performance

5 Year cumulative +143%, March 25/ March 26 +54%.

2 months April & May 26     +25%

Key Takeaways

For the New Investor

Technology powers much of the global economy and will remain an important source of long-term growth and wealth.

Rather than trying to identify the winning companies.

• Open a stocks and shares ISA or Junior ISA.
• Chose a low-cost global technology tracker fund such as the one we have mentioned.
• Set up a regular monthly investment of £25 or more, if you can afford it.
• Leave it alone and keep investing regardless of what headlines say.

You don’t need to be an expert. Start early, invest every month and give your money time to grow.

For the Established Investor

Tech has been one of the strongest performing sectors for the last few years, but success creates its own challenges.

Consider asking yourself.

• Has technology become too large a proportion of my portfolio.
• Am I comfortable with the concentration in a handful of mega-cap US companies?
• Would an actively managed tech fund provide exposure to emerging businesses that may become tomorrow’s market leaders.
• Would these funds remove companies that have not kept pace with new developments in AI and other tech fields.

Own tech as a key part of a balanced portfolio, stay invested through volatility and focus on long term growth rather than short term headlines.

Wishing you every success in your Tech investing