Google is one of the few winners – or even survivors – from the first wave of technology-based internet companies, and yesterday it celebrated the 15th anniversary of its launch. But does its success mean the technology sector is now an established and safe home for investors?
"Technology is an attractive sector," said HyunHo Sohn, co-manager of the Fidelity Funds Global Technology Fund. "Since the dot.com bubble, the sector has sharply de-rated and now trades on attractive valuations relative to other sectors and its own history.
"Furthermore, the industry has an attractive growth profile on the back of continued innovations and strong intellectual property."
He's a specialist fund manager in the sector so you'd expect him to be upbeat about prospects.
Although quick to concede that the technology sector can be volatile and uncertain, he adds: "There are many technology companies that have built a robust business model and strong balance sheet, generating real earnings, paying real dividends.
"In addition, they have good management teams capable of adapting quickly to changing environment."
He favours the communications infrastructure segment – such as mobile phone and tablet technology – which he believes will benefit from growing data demand.
Peter Kaye, portfolio manager of the Fidelity America Fund, agrees. "Investors, wary of the structural decline in personal computing and the cyclical slowdown in enterprise spending, have focused on a select group of stocks that have been able to monetise the 'mobile' opportunity," he says.
"However, some of these names are now well recognised," he points out.
"I prefer to focus on stocks leveraged to the segments which are less well appreciated but where underlying secular drivers are strong, such as storage, security and telecommunications equipment."Reuse content