London’s first ‘technology week’ launched to much fanfare recently, with the city being described as the “digital capital of Europe”. But like it or not, what really matters to investors is not Silicon Roundabout but Silicon Valley, says Laura Shannon in The Mail on Sunday.
The portfolio of stocks held by Walter Price, manager at Allianz, proves the point. “US companies make up 85% of the trust”, with Chinese firms second at 4%.
San Francisco-based Price thinks US tech firms are at the forefront of a “seismic shift” in the sector. The rise of cloud computing (where firms and individuals rent storage and software, rather than having to own it) and smartphone-based internet browsing could transform tech’s share of the stock market, he tells The Mail on Sunday.
He holds the sector’s big names in the RCM Technology Trust (LSE: RTT), including Apple, Facebook and Microsoft, and reckons the large-cap firms could raise their dividend payments substantially. But his main interest is cloud computing, which he believes is a development “of a magnitude that only happens every 15 or 20 years”.
Around 20% of the investment trust is in cloud-computing firms, such as Amazon, Salesforce, Rackspace and NetSuite, which help start-ups save on IT costs. He focuses on mid-to-large-caps that he believes have higher growth potential than the mega-caps, aiming to find the sector’s “next Apple”.
His approach has mostly paid off. The performance is not especially impressive over five years – 144.4% compared to 160.9% for its benchmark technology, media and telecoms index. But over one and three years it’s beaten the market, delivering 31.5% and 49% returns respectively. The ongoing fee is 1.32%.
| RCM Technology Trust top ten holdings | |
|---|---|
| Name of holding | % of assets |
| Apple | 7.60% |
| Palo Alto Networks | 4.70% |
| SanDisk Corp | 4.60% |
| Sunpower Group | 4.50% |
| Microsoft | 4.10% |
| ServiceNow | 4.00% |
| Tesla Motors | 3.30% |
| 3.20% | |
| Western Digital | 3.10% |
| Micron Technology | 2.70% |