“What it shouldn’t be used for is exposure to those technology giants of yesteryear with obsolete products that have been superseded by the new generation.”
However, Mr Gleeson argues that while the success of Google and Apple has meant they have made an appearance in many mainstream equity funds, the tendency for these funds is to concentrate on the large-cap stocks.
He notes: “My point of view is that there are a lot of exciting things happening down the market cap scale in technology, and generalist portfolio managers typically don’t have the time or the resources to go and research those small and mid-cap tech companies they should be investing in.”
Mr McDermott favours a number of tech funds including the $433.1m (£283.8) Polar Capital Global Technology fund run by Nick Evans and Ben Rogoff, and the £164.6m GLG Technology Equity fund managed by Philip Pearson and Anthony Burton.
Another favourite of his, and also of Mr Willis’s, is Mr Gleeson’s Axa Framlington Global Technology fund (see page 31).
Mr Willis notes: “Mr Gleeson employs a stockpicking approach favouring mid and small-cap tech companies, and he will also meet and visit company management regularly to get first-hand information.
“He currently has a bias towards US technology companies favouring those with market-leading products and therefore a competitive edge. We believe that for investors seeking explicit exposure to this sector, then this fund is an excellent choice.”
An alternative for Andy Parsons, head of investment research at The Share Centre, is the £353.13m Henderson Global Technology fund run by Stuart O’Gorman and Gordon Happell (see page 32).
Mr Parson notes: “The fund benefits from a shift in demographics helping to drive technological adoption. In some developing countries, demand for mobile phones is far greater than that of land lines. It is also placed to benefit from changes in consumer behaviour as online shopping continues to grow and technology companies take advantage of this.”
With technology stocks becoming more mainstream, investors can achieve exposure to the sector through generalist funds. But for those looking for specialists and the chance to invest in lesser known companies with better returns, the pure tech funds remain the best option.
