Personal Finance: Time to spread the risk

Microsoft's court defeat may boost technology sector, by Paul Slade

Small savers with money in Britain's handful of specialist technology funds will have been eying their screens nervously in the past few days. The US courts' anti-trust ruling against Microsoft on 5 November was bound to make technology investors wary. Judge Thomas Penfield Jackson did not mince his words, saying Microsoft had used its immense muscle to "harm any firm that ... could intensify competition against one of Microsoft's core products".

Alan Torry, manager of the SocGen Technology trust, says: "The Microsoft ruling is a wake-up call to investors that they can't always look for safety in the largest of the tech companies. They really have to spread their risk."

Given that Microsoft is such a big player in the technology sector, you might expect it to dominate the stock selection in specialist technology funds too. In fact, most technology funds hold only a small proportion of their assets in Microsoft shares, preferring to seek value among the company's smaller rivals instead. Scottish Equitable Technology devotes just 2.25 per cent of its pounds 63m funds under management to Microsoft shares. Henderson's pounds 289m Global Technology fund has only 0.75 per cent of assets in Microsoft shares.

Paul Kleiser, manager of the Scottish Equitable fund, says: "It would be a strange technology fund that didn't have any Microsoft in it. But it's not up to weight. That's mainly because Microsoft has been pretty highly-valued for quite a while, and there are plenty of opportunities elsewhere."

Tim Woolley, manager of Henderson Global Technology, adds: "We've had new money into the fund which we've not been putting into Microsoft, so its weighting has been going down. We're looking to give you exposure to some of the leaders, but also try and position you in the mid-cap growth companies."

Microsoft may suffer from being forced to loosen its monopolistic grip on the market, and its rivals could only benefit. Mark Johnson, head of research at stockbrokers Killik & Co says: "I think the ruling is good for the technology sector as a whole. If Microsoft get away with not being broken up, and is just told to play more fairly with its suppliers and its customers, it may not want to push itself into another market where it's trying to take over and control everyone else."

Kleiser believes that technology funds will ultimately be affected far more by the interest rate climate set by the US Federal Reserve than by any decline in Microsoft's fortunes. "The biggest factor that will influence technology stocks is Alan Greenspan," he says. "Technology tends to be a high-value, high-growth area, and that flourishes best in an environment of low interest rates."

Those looking after national funds will want to ensure their holdings broadly match the make up of the host country's stockmarket. Microsoft accounts for about 4 per cent of the S&P index's capitalisation, which means US funds are likely to have a far higher proportion of their portfolio in the company than any specialist technology fund would.

This principle applies just as much to actively-managed funds as it does to US index trackers. Scottish Equitable's actively-managed American trust, for example, has about 5 per cent of funds under management in Microsoft shares.

Paradoxically enough, it may not be tech fund investors who should be worried at any threat to Microsoft, but those in much more broadly-based US funds.

Arts and Entertainment
The Doctor and Clara have their first real heart to heart since he regenerated in 'Deep Breath'
TV
Arts and Entertainment
James Hewitt has firmly denied being Harry’s father
arts + ents
Arts and Entertainment
Jamie Oliver
filmTV chef Jamie Oliver turned down role in The Hobbit
News
The official police photograph of Dustin Diamond taken after he was arrested in Wisconsin
peopleDownfall of the TV star charged with bar stabbing
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
Life and Style
ebookNow available in paperback
ebooks
ebookPart of The Independent’s new eBook series The Great Composers
News
i100
Arts and Entertainment
The Hobbit: The Battle of the Five Armies looks set to be a dramatic conclusion to Peter Jackson's trilogy
film
Life and Style
tech
Arts and Entertainment
Jeremy Clarkson, left, and Richard Hammond upset the locals in South America
tvReview: Top Gear team flee Patagonia as Christmas special reaches its climax in the style of Butch and Sundance
News
people
Sport
Ashley Barnes of Burnley scores their second goal
footballMan City vs Burnley match report
News
news
News
Sir James Dyson: 'Students must be inspired to take up the challenge of engineering'
i100
Arts and Entertainment
Man of action: Christian Bale stars in Exodus: Gods and Kings
film
Life and Style
Apple showed no sign of losing its talent for product launches with the new, slightly larger iPhone 6 making headlines
techSecurity breaches and overhyped start-ups dominated a year in which very little changed (save the size of your phone)
Arts and Entertainment
Catherine (Sarah Lancashire) in Happy Valley ((C) Red Productions/Ben Blackall)
TV
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

ES Rentals

    iJobs Job Widget
    iJobs General

    Recruitment Genius: Junior Developer / Mobile Apps / Java / C# / HTML 5 / JS

    £17000 - £28000 per annum: Recruitment Genius: Junior Mobile Application Devel...

    Recruitment Genius: LGV Driver - Category C or C+E

    £23000 - £26000 per annum: Recruitment Genius: This national Company that manu...

    Recruitment Genius: Sales Consultant - OTE £30,000

    £13000 - £30000 per annum: Recruitment Genius: Scotland's leading life insuran...

    Recruitment Genius: Maintenance Assistant

    £25000 - £30000 per annum: Recruitment Genius: A Maintenance Assistant is requ...

    Day In a Page

    A timely reminder of the bloody anniversary we all forgot

    A timely reminder of the bloody anniversary we all forgot

    Who remembers that this week we enter the 150th anniversary year of the end of the American Civil War, asks Robert Fisk
    Homeless Veterans appeal: Former soldiers pay their respects to a friend who also served

    Homeless Veterans appeal

    Former soldiers pay their respects to a friend who also served
    Downfall of Dustin 'Screech' Diamond, the 'Saved By The Bell' star charged with bar stabbing

    Scarred by the bell

    The downfall of the TV star charged with bar stabbing
    Why 2014 was a year of technological let-downs

    Why 2014 was a year of technological let-downs

    Security breaches and overhyped start-ups dominated a year in which very little changed (save the size of your phone)
    Cuba's golf revolution: But will the revolutionary nation take 'bourgeois' game to its heart?

    Will revolutionary Cuba take 'bourgeois' golf to its heart?

    Fidel Castro ridiculed the game – but now investment in leisure resort projects is welcome
    The Locked Room Mysteries: As a new collection of the genre’s best is published, its editor Otto Penzler explains the rules of engagement

    The Locked Room Mysteries

    As a new collection of the genre’s best is published, its editor explains the rules of engagement
    Amy Adams on playing painter Margaret Keane in Tim Burton's Big Eyes

    How I made myself Keane

    Amy Adams hadn’t wanted to take the role of artist Margaret Keane, because she’d had enough of playing victims. But then she had a daughter, and saw the painter in a new light
    Ed Richards: Parting view of Ofcom chief. . . we hate jokes on the disabled

    Parting view of Ofcom chief... we hate jokes on the disabled

    Bad language once got TV viewers irate, inciting calls to broadcasting switchboards. But now there is a worse offender, says retiring head of the media watchdog, Ed Richards
    A look back at fashion in 2014: Wear in review

    Wear in review

    A look back at fashion in 2014
    Ian Herbert: My 10 hopes for sport in 2015. Might just one of them happen?

    Ian Herbert: My 10 hopes for sport in 2015

    Might just one of them happen?
    War with Isis: The West needs more than a White Knight

    The West needs more than a White Knight

    Despite billions spent on weapons, the US has not been able to counter Isis's gruesome tactics, says Patrick Cockburn
    Return to Helmand: Private Davey Graham recalls the day he was shot by the Taliban

    'The day I was shot by the Taliban'

    Private Davey Graham was shot five times during an ambush in 2007 - it was the first, controversial photograph to show the dangers our soldiers faced in Helmand province
    Revealed: the best and worst airlines for delays

    Revealed: the best and worst airlines for delays

    Many flyers are failing to claim compensation to which they are entitled, a new survey has found
    The stories that defined 2014: From the Scottish independence referendum to the Ice Bucket Challenge, our writers voice their opinions

    The stories that defined 2014

    From the Scottish independence referendum to the Ice Bucket Challenge, our writers voice their opinions
    Stoke-on-Trent becomes first British city to be classified as 'disaster resilient' by the United Nations

    Disaster looming? Now you know where to head...

    Which British city has become the first to be awarded special 'resilience' status by the UN?