Fund of the week: Tech stocks finally deliver
Oct 02, 2009
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As fund management jobs go, "I have a very hard one to be honest", says Nick Evans, manager of the Polar Capital Global Technology Fund. He has to convince investors there is still money to be made in technology, "eight to nine years after people got badly burnt".
But his job might be getting easier – investors seem to have finally got the message. Assets under management have gone from $20m in February to $105m, during which time the fund has returned 63.71%. Over the same period, the FTSE All-World is up 46.4%. Can the outperformance continue?
Evans believes so. He's convinced that a new technology cycle is unfolding. Cloud-computing and new internet broadband applications should drive growth in the sector, as corporations look to new technology to drive down overheads. "Productivity matters now, it didn't before."
This should help companies such as Aruba Networks, which installs low-cost wireless internet connections for firms. It's stealing market share from Cisco Systems and growing profits "yet it trades on a reasonable 2.5x forward enterprise-value/revenue multiple".
He also likes Apple, "the clear leader in smart phones", as it has "a significant 18-month-plus advantage relative to competitors." It has sold 30 million iPhones to date in a handset market that sells over 1.1 billion units a year. Yet along with RIMM, the makers of the BlackBerry, it boasts 45% of the industry's profits. "People got caught up in the hype" around 2000, says Evans.
But the tech sector has since gone from an earnings multiple of 60 times or more to lows of 12 times earnings this year. With low pensions liabilities and as the only sector with net cash on the balance sheet, "it is finally delivering on that hype".
Tel: 020-7227 2709.
Polar Capital Global Technology's top ten holdings
| Name of holding | % of assets |
|---|
| Apple |
3.5 |
| Google |
3.4 |
| Microsoft |
3.0 |
| Qualcomm |
2.8 |
| Cisco Systems |
2.8 |
| Oracle |
1.8 |
| Samsung Electronics |
1.6 |
| Intel |
1.6 |
| Cognizant Technology Solutions |
1.6 |
| Analog Devices |
1.6 |
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