Fear and fun on the hi-tech big dipper

For those investors who enjoy a roller-coaster ride, the technology sector is guaranteed to provide plenty of ups and downs. The performance of technology funds over the past year has been turbulent. The highs of late last year and early this year may have encouraged investors to pile in but the lows that followed when the technology bubble burst in March left many with fingers burnt.

For those investors who enjoy a roller-coaster ride, the technology sector is guaranteed to provide plenty of ups and downs. The performance of technology funds over the past year has been turbulent. The highs of late last year and early this year may have encouraged investors to pile in but the lows that followed when the technology bubble burst in March left many with fingers burnt.

While the technology sector is now recovering, given its volatility, is it a good place to invest your individual savings account (ISA) allowance?

Although themed funds tend to be volatile as their diversity is limited, the technology sector in particular has great potential for investment growth given the global impact technology is having on our lives.

There is also much more choice for investors, with the number of pure tech funds increasing from six to over 20 during the past two years.

Every investor should aim to have some tech exposure in their portfolio because this is where real investment growth will be seen over the long term. The amount of exposure you have will depend on the type of investor you are.

When choosing an ISA, remember that most funds have tech exposure, even if they aren't labelled a "tech fund". So, if you have invested in the Gartmore UK Smaller Companies fund, Invesco's European Growth fund or Dresdner RCM's UK Midcap fund, you could have considerable exposure to tech stocks already.

Some investors will want a pure tech fund. Demand for these funds is still high, with investors tending to opt either for technology or European funds.

John Churm, technical support manager at independent financial adviser (IFA) Torquil Clarke, says when demand for tech funds peaked earlier this year, some 40 per cent of his company's business was from investors wanting such funds. This has now fallen to between 15 and 20 per cent.

Those who invested in tech funds in February and March will have had some uneasy months wondering if they would recoup their losses. Ian Beestin, director of online discount broker, The ISA Shop, is confident these people will see their investment grow.

"It is impossible to get the timing right, but because of the growth you will see in the long term it won't matter, even for those who bought at peak prices," says Mr Beestin.

When choosing a tech fund you are advised to look at an investment of at least 10 years in order to guarantee growth.

Henderson's Global Technology fund has performed consistently over the past five years. But three of its fund managers resigned and are set to leave in January. This has challenged some investors' confidence, but most IFAs say investors should stay put.

"While you can't ignore the fact that they're going, you've also got to look at what remains," says Craig Whetton, chief executive of IFA Chartwell Investment.

"They will have done a lot of the work, but they also have a team indoctrinated with their ways of working. It may make good reading to say investors should get out now, but it's not good advice."

If you put your ISA allowance in a tech fund, you are looking at great potential for long-term growth. However, do appreciate the risk and understand the volatility of the market. If you are risk-averse, tech funds are not for you.

* Contacts: Chartwell, 01225 321700; The ISA Shop, www.isa-shop.co.uk; Torquil Clarke, 01902 576778.

Independent Partners; Do you need financial advice on your investments, pension or insurance? Book a free consultation with an independent Financial Adviser at VouchedFor.co.uk

Finacial products from our partners
Property search
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
SPONSORED FEATURES
Independent Dating
and  

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

ES Rentals

    iJobs Job Widget
    iJobs Money & Business

    Recruitment Genius: Sales Executive / Foreign Exchange Dealer - OTE £40,000+

    £16000 - £40000 per annum: Recruitment Genius: A Foreign Exchange Dealer is re...

    SThree: Experienced Recruitment Consultant

    £20000 - £40000 per annum + OTE + Incentives + Benefits: SThree: Established f...

    SThree: Trainee Recruitment Consultant

    £20000 - £25000 per annum + OTE 40/45k + INCENTIVES + BENEFITS: SThree: The su...

    Recruitment Genius: Collections Agent

    £14000 - £16000 per annum: Recruitment Genius: This company was established in...

    Day In a Page

    The long walk west: they fled war in Syria, only to get held up in Hungary – now hundreds of refugees have set off on foot for Austria

    They fled war in Syria...

    ...only to get stuck and sidetracked in Hungary
    From The Prisoner to Mad Men, elaborate title sequences are one of the keys to a great TV series

    Title sequences: From The Prisoner to Mad Men

    Elaborate title sequences are one of the keys to a great TV series. But why does the art form have such a chequered history?
    Giorgio Armani Beauty's fabric-inspired foundations: Get back to basics this autumn

    Giorgio Armani Beauty's foundations

    Sumptuous fabrics meet luscious cosmetics for this elegant look
    From stowaways to Operation Stack: Life in a transcontinental lorry cab

    Life from the inside of a trucker's cab

    From stowaways to Operation Stack, it's a challenging time to be a trucker heading to and from the Continent
    Kelis interview: The songwriter and sauce-maker on cooking for Pharrell and crying over potatoes

    Kelis interview

    The singer and sauce-maker on cooking for Pharrell
    Refugee crisis: David Cameron lowered the flag for the dead king of Saudi Arabia - will he do the same honour for little Aylan Kurdi?

    Cameron lowered the flag for the dead king of Saudi Arabia...

    But will he do the same honour for little Aylan Kurdi, asks Robert Fisk
    Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

    Our leaders lack courage in this refugee crisis. We are shamed by our European neighbours

    Humanity must be at the heart of politics, says Jeremy Corbyn
    Joe Biden's 'tease tour': Could the US Vice-President be testing the water for a presidential run?

    Joe Biden's 'tease tour'

    Could the US Vice-President be testing the water for a presidential run?
    Britain's 24-hour culture: With the 'leisured society' a distant dream we're working longer and less regular hours than ever

    Britain's 24-hour culture

    With the 'leisured society' a distant dream we're working longer and less regular hours than ever
    Diplomacy board game: Treachery is the way to win - which makes it just like the real thing

    The addictive nature of Diplomacy

    Bullying, betrayal, aggression – it may be just a board game, but the family that plays Diplomacy may never look at each other in the same way again
    Lady Chatterley's Lover: Racy underwear for fans of DH Lawrence's equally racy tome

    Fashion: Ooh, Lady Chatterley!

    Take inspiration from DH Lawrence's racy tome with equally racy underwear
    8 best children's clocks

    Tick-tock: 8 best children's clocks

    Whether you’re teaching them to tell the time or putting the finishing touches to a nursery, there’s a ticker for that
    Charlie Austin: Queens Park Rangers striker says ‘If the move is not right, I’m not going’

    Charlie Austin: ‘If the move is not right, I’m not going’

    After hitting 18 goals in the Premier League last season, the QPR striker was the great non-deal of transfer deadline day. But he says he'd preferred another shot at promotion
    Isis profits from destruction of antiquities by selling relics to dealers - and then blowing up the buildings they come from to conceal the evidence of looting

    How Isis profits from destruction of antiquities

    Robert Fisk on the terrorist group's manipulation of the market to increase the price of artefacts
    Labour leadership: Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea

    'If we lose touch we’ll end up with two decades of the Tories'

    In an exclusive interview, Andy Burnham urges Jeremy Corbyn voters to think again in last-minute plea