It is burning money on the Metaverse and virtual reality, basically giving away headsets at a massive loss. The key is that it has the ability to do this, and should it strike gold again the share price will skyrocket.
You almost have to look at tech as a two-speed economy as most of those big companies have fortress balance sheets – they do not have huge amounts of debt like BP or Shell. They have also got strong earnings growth because they are great businesses, not because we have lived in a low interest rate world since 2009.
There will be more volatility further down the market-cap scale, but that is no different to any other sector, where liquidity becomes a greater issue. That is where an active manager earns their bread.
I will end by saying this: there is now 1bn iPhone users worldwide – if Apple decided to double the price of your device would you get rid of it? The answer for many of us is no. It will not take too many falling apples to hit the market on the head before it realises that either.
Here are some funds to consider for tech exposure:
1. AXA Framlington Global Technology
This is an unconstrained multi-cap, specialist fund that seeks growth from technology stocks from around the world. Its lack of benchmark constraints means it is free to invest in 'new' technology rather than 'old' technology.
Jeremy Gleeson has successfully run this fund since 2007 and has been specialising in technology stocks since 1998. His level-headed commitment to finding new opportunities with strong commercial potential and ignoring yesterday’s winners, coupled with his and his team’s vast experience, has led to very strong performance over the years.
2. Threadneedle Global Extended Alpha
Threadneedle Global Extended Alpha is a quality growth fund that buys high return on capital businesses experiencing sustainable structural growth. It has a 130/30 structure, giving it the extra ability to short stocks that manager Neil Robson expects to do badly.
Businesses in the fund will have a strong market position and a competitive advantage. They will earn a high return on capital, be sustainable and have good growth potential. Tech currently accounts for more than a third of the portfolio (30 per cent net), comfortably the largest sector exposure.
3. Invesco Global Focus
Managed by Randall Dishmon, this is a high conviction, concentrated fund, which invests in structural growth winners. The philosophy behind the portfolio, which contains around 35 stocks, is to buy companies that are winning and then let them compound over time.
The manager’s approach is refreshingly simple: understand the structural trends that are changing the world and then invest in the best companies that are benefitting from these trends. One third of the portfolio currently sits in tech, with Facebook (Meta) and Amazon its two largest holdings.