Henderson Global Technology fund
Andy Parsons, head of investment research at The Share Centre, examines the opportunities available to investors from the technology sector and recommends the Henderson Global Technology fund.
"For many investors, the mere thought of investing in technology is likely to make the hairs on the back of their necks stand on end, as flash backs to the late 90s, early 2000 and the collapse of many dotcom companies spring to mind. Lessons were learned by technology companies in the dotcom crash causing the entire industry to become very prudent.
"Prudency of management and keeping a tight rein on the finances is key to a company's survival, particularly in economic conditions such as at present and technology is currently the only global sector with more net cash than debt on its balance sheets, putting many of these companies in a secure position. This also gives them the means to expand through mergers and acquisitions or reward shareholders with share buybacks and increasing dividend distributions.
"As the pace of our every day lives continue to accelerate, we are continually placing demands on technology providers to meet these needs and the demand for technology is higher than it has ever been. There are an increasing number of people using mobiles, iPods and iPads, and to ‘Google' something is a term in itself.
"The Henderson Global Technology fund is a good starting point for UK investors seeking exposure to the growing appetite for innovation and technological advancements. The fund is managed by Stuart O'Gorman and Ian Warmerdam and looks at the drivers of technology demand and seeks to grow returns from them.
"As economic uncertainty continues, the fund managers take comfort in the strength of the technology industry and companies that have growth themes such as online advertising, data growth, paperless payment and e-commerce.
"The fund has a predominantly large market cap bias towards its underlying holdings, with the portfolio generally holding between 60-80 companies. In terms of performance, the fund is ranked first quartile within its sector over five years, returning 52.2% compared to the sector average of 41.26%, whilst over three years, the fund is ranked second quartile returning 62.22% compared to the sectors 63.52%. Year to date, the fund is once again ranked first quartile, having returned 6.53% compared to the sector average of 5.25%."