Ever since the dotcom crash, technology stocks have been out of favour. But it’s time investors re-evaluated the sector. Mick Gilligan of Killik & Co thinks investors should get back into technology stocks. He accepts it is a cyclical sector that has experienced falling profits as economic activity has declined.
But now, “the strong balance sheets and diversified income streams of a number of US large-cap names leave them well positioned to lead consolidation in the industry, reducing competition and raising profit margins”, he tells The Daily Telegraph. He recommends the Polar Capital Technology Trust (LSE: PCT) for those wanting exposure to the sector via a fund.
“When the gold rush first started, hundreds set off with their pickaxes for gold – but only a few made it big. Nobody knew which stocks would be successful at the time,” Ben Rogoff, the manager of the trust, tells The Daily Telegraph. Rogoff believes the technology sector is the same and new champions have emerged over the past ten years.
For example, Microsoft has been hugely successful, but Rogoff believes its days are now numbered as Google seizes market share. “How can you compete with free? Google has acquired and launched products that have slowly eaten away at Microsoft. Windows 7 will be the last hurrah for Microsoft. I am selling the stock after that.”
Rogoff certainly seems to understand his patch. The Polar Capital Technology Trust has risen 83% in the last year and 58.9% over the past five years. The aim of the trust is to maximise capital growth through investing in technology companies around the world.
Contact: 020-7227 2700, www.polarcapital.co.uk.
Polar Capital Technology Trust top ten holdings
| Name of holding | % of assets |
|---|---|
| Apple | 6.4 |
| Microsoft | 5.2 |
| 4.9 | |
| International Business Machines | 3.7 |
| Cisco Systems | 3.6 |
| Hewlett-Packard | 3.0 |
| Oracle | 2.8 |
| Intel | 2.6 |
| Samsung Electronics | 2.4 |
| Qualcomm | 2.2 |