Growth 

Funds hardest hit by Facebook’s tumble revealed

Funds hardest hit by Facebook’s tumble revealed

The 10 funds managers with the greatest exposure to Facebook are moving to reassure investors following a drop in the social media giant's share price.

Jeremy Gleeson, manager of the Global Technology fund for Axa, which Morningstar data showed has a 6.9 per cent portfolio weighting to the social media giant, spoke out on the impact of Facebook’s lower than expected earnings announced this week.

He said his fund invests for the long term and he believe that the trends supporting the investment case for Facebook remain intact.

He said the share price move - which saw - were a combination of profit taking on a stock that had been up significantly in the last few months, and an over-reaction to the company flagging some near term issues that they are facing.

Mr Gleeson said: "We continue to back the management team to be able to resolve any issues, and to ensure they are compliant with the General Data Protection Regulation (GDPR) principles more broadly.

"To put the quarter two numbers in context, they were a little below expectations, impacted by a number of factors that were out of their control, for example FX considerations and the GDPR regulation.

"Despite this, they still added 228 million monthly active users (MAUs) over 12 months to their core Facebook platform, which now has 2.23 billion monthly active users.

"In Europe, where the GDPR impact was felt most – monthly active users dropped by just one million, to 376 million monthly active users in the first quarter - a decline of just 0.27 per cent. Revenues were up 42 per cent year-on-year and Facebook's share price is up 15 per cent since the Cambridge Analytica news first hit in late March.  

"Whilst  Facebook is our thirrd largest position in the Axa Framlington Global Technology fund, the active weight as of the end of June was 0.83 per cent, so the relative impact is minimal – a benefit of a diversified actively managed portfolio.”

10 UK investment funds with highest weightings to Facebook:

Fund

Portfolio Weighting %

Position Market Value, GBP

As at

AXA Framlington Global Technology Fund

6.90

36,895,496.00

31/05/2018

Baillie Gifford L/T Global Growth Invmt Fund

6.45

194,542,883.00

30/04/2018

Janus Henderson Global Technology Fund

6.25

53,887,023.00

31/05/2018

Loomis Sayles US Equity Leaders Fund

6.21

32,424,780.73

31/05/2018

Polar Capital Technology

5.47

84,826,152.00

30/04/2018

Thesis Eldon Fund

5.40

3,257,801.87

31/05/2018

Morgan Stanley US Advantage Fund

4.96

12,425,835.00

30/06/2018

L&G Global Technology Index Trust

4.60

10,601,386.00

30/04/2018

Baillie Gifford American Fund

4.52

56,286,277.00

30/04/2018

Franklin US Opportunities Fund

4.03

5,895,816.00

30/06/2018

A spokesman for Legal & General, whose L&G Global Technology Index trust is also in the top 10 list for investment funds with highest weightings to Facebook, said: “We don’t comment on specific stocks as a corporate policy but it’s worth nothing that this is an index fund that tracks companies in the FTSE World index, which are engaged in information technology activities, not an active fund so we are not taking active positions."

A spokesperson for Morgan Stanley, which has Morgan Stanley US Advantage fund in the top 10 list , said: “We do not have a comment on Facebook.”

Facebook lost more than $100bn in value, and its share price dropped by nearly 20 per cent, last week. 

Ben Barringer, equity research analyst at Quilter Cheviot, believes investors need to sort through the media noise in order to understand the underlying business case of Facebook.

He said: "Facebook is making the changes to ensure that its place as the leading social media network is maintained following considerable scrutiny in the press and on Capitol Hill. Facebook’s user base remains large with over two billion monthly active users and over 1.4 billion daily active users.