Tech funds - too risky?

Prism

Having just checked AXA Framlington's Global Technology investment policy it basically says it can invest in all sectors anywhere in the world but might take into consideration MCSI World Information Technology.

[Deleted User]

But the first respondents  - like most - simply saw the word "tech", and advised on the basis of their self-imposed limits, without really knowing what it was they were limiting.

And I don't blame them because they are told that staying within certain parameters - allocations in sectors that may not even exist -  confers a certain virtue that keeps them safer from the vagaries of the market.

And look at it:
Technology Hardware, Storage & Peripherals 23.13% Systems Software 18.91% Data Processing & Outsourced Services 13.81% Semiconductors 13.43% Application Software 13% IT Consulting & Other Services 4.64% Semiconductor Equipment 3.64% Communications Equipment 2.85% Internet Services & Infrastructure 2.4% Electronic Equipment & Instruments 2.15% Electronic Components 1.41% Other 0.62%

As if that was the answer.

Shocking_Blue

Legal & General Global Technology Index Trust I Class Accumulation

Thanks for this, and glad to see it's generated some discussion and shed some light on the nature of labelling, pigeonholing, slicing and dicing etc. This in itself is valuable information.
I've seen various opinions on what tech is, the similarities and differences between dot.com and now, and heard various attitudes to investing in tech, from obvious reservations (nature of tech; tech prices having peaked; I saw someone in another thread on this fund refer to extremely high risk) to more optimistic outlooks. This is all good as although there's no consensus on tech, it's illuminated the field somewhat.
As for that fund I mentioned, what I can make of it (nb: newbie but taking in what's being said) is that it's ok as a satellite fund, perhaps no more than 10% of total holdings. There has been a real volatility to 'tech' in the past, but there are some differences between what that term meant then and what it might mean now (and all the risk etc that might go with it). So called 'niche' funds might still carry with them a heightened risk, which might lead to falls similar to dot.com so are best avoided, but funds that have tech top players (Apple, MS) as a large part of their tech profile might be better insulated against any violent movements. With that in mind the fund above might be a reasonable choice as an add on to core funds (10%-ish) - some risk, but mitigated because of it's key holdings.

I think I’ll stick a bit in, bearing all that in mind. These forums provide a great insight into such matters.

Cheers

[Deleted User]

Shocking_Blue said:

Legal & General Global Technology Index Trust I Class Accumulation

Thanks for this, and glad to see it's generated some discussion and shed some light on the nature of labelling, pigeonholing, slicing and dicing etc. This in itself is valuable information.
I've seen various opinions on what tech is, the similarities and differences between dot.com and now, and heard various attitudes to investing in tech, from obvious reservations (nature of tech; tech prices having peaked; I saw someone in another thread on this fund refer to extremely high risk) to more optimistic outlooks. This is all good as although there's no consensus on tech, it's illuminated the field somewhat.
As for that fund I mentioned, what I can make of it (nb: newbie but taking in what's being said) is that it's ok as a satellite fund, perhaps no more than 10% of total holdings. There has been a real volatility to 'tech' in the past, but there are some differences between what that term meant then and what it might mean now (and all the risk etc that might go with it). So called 'niche' funds might still carry with them a heightened risk, which might lead to falls similar to dot.com so are best avoided, but funds that have tech top players (Apple, MS) as a large part of their tech profile might be better insulated against any violent movements. With that in mind the fund above might be a reasonable choice as an add on to core funds (10%-ish) - some risk, but mitigated because of it's key holdings.

I think I’ll stick a bit in, bearing all that in mind. These forums provide a great insight into such matters.

Cheers

That's fair enough Shocking Blue but realise that the 5 year return on this fund, though strikingly impressive at 254%, is much less than that of its two main holdings, Aapl and Microsoft, at 380% and 396% (plus dividends). Also, on the risk aspect, these two companies are not twenty times as big as your favoured fund, but two thousand times as big. Sorry.

GazzaBloom

50% of my ISA is invested in Polar Capital Global Technology Fund. I like Ben Rogoff's approach to how they select companies to invest in. They wait until all the froth and fizz of the IPO and early days of venture capital requirements, breakthrough and disruption have passed and invest for the next phase of the life cycle as the business starts to establish and the hype and promise turns to reality, which is where Tesla are moving to, the recent battery day was less fireworks and hyperbole and more about grinding out incremental improvements to their manufacturing process and ability and cost control. This is sound approach with tech as the recent issues with Nikola have demonstrated as the early promises appear to be turning into vapourware.

Tech is an increasingly important sector and will grow exponentially, we're never going back to the horse and cart. It's a sector worthy of a decent size of a portfolio if you are happy with the way the fund is managed.

Here's Ben Rogoff explaining how Polar Capital invest in tech:

https://youtu.be/M_mQ0BzUEO0