BrianTora: 'Markets cram an awful lot into a short space of time these days'

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The Independent Online

Is it time to go back into the technology market? There is no doubt that value is emerging amongst some companies in those magic sectors - Technology, Media and Telecoms (TMT). There are shares that have comprehensively collapsed. It is estimated that if the FTSE 100 Index were to be re-based again, as many as six of the new entrants that came in earlier this year would be consigned to the less high profile 250 Index.

Is it time to go back into the technology market? There is no doubt that value is emerging amongst some companies in those magic sectors - Technology, Media and Telecoms (TMT). There are shares that have comprehensively collapsed. It is estimated that if the FTSE 100 Index were to be re-based again, as many as six of the new entrants that came in earlier this year would be consigned to the less high profile 250 Index.

Thematic investment has become increasingly popular of late. But of all the ways of approaching thematic investment, technology is, perhaps, the one that stands up to the quality tests. There are good technology companies all around the Globe - not just in America. And many say that technology is the future, at least so far as investing is concerned. The problem is trying to find companies that will reward you rather than those that may not be here in a few years time.

Even the biggest companies in this field can suffer wild gyrations in their share price. Not so very long ago Microsoft was the world's biggest company by market capitalisation. In a few short months it has lost nearly half its value. There may be special reasons to apply to Microsoft, but with fluctuations like this, investors would do well to approach this sector carefully. Take last week as an example. On Monday, the NASDAQ Index took a dive. At one stage it was 8 per cent down, but closed 4.5 per cent lower to give investors a nasty shock. The following day the Index rebounded with the third highest points rise on record. Markets cram an awful lot into a short space of time these days.

There is a wide range of technology funds. Henderson Technology, the investment trust, was originally called Atlas Electric and General and had a sort of technology bias a generation ago. However, it has been nearly 20 years since this fund, which has been run by Brian Ashford Russell for much of this time, concentrated solely on the technology sector. Unfortunately, the shares stand at a premium of more than 8 per cent over asset value, which only goes to show how much in demand this sector is.

You could look at Henderson Global Technology Fund as an alternative. At a little over £1bn, the portfolio is around double that of the investment trust. Tim Woolley runs it at Henderson Investors and has enacted a truly international fund, with 130 holdings spread between 14 countries.

Another manager who has a long record of looking after technology funds is Alan Torry, now with SocGen Asset Management. Since its launch in 1998, the SocGen Technology Unit Trust has risen by almost 250 per cent. SocGen is a new player in the investment management stakes and one that is rapidly building a strong reputation. The portfolio of the fund is well spread with around 85 holdings and the managers have achieved good results without having to take large stock or sector bets. There must be a university of technology investment out there in the Square Mile.

Brian Tora is Chairman of the Greig Middleton Investment Strategy Committee

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