ALLENBRIDGE LOOKS AT TECHNOLOGY FUNDS

PRESS RELEASE - 09-04-2010

A decade after the bubble burst, Allenbridge looks at technology funds.

Exactly 10 years ago, the dotcom tech bubble burst, leaving many unit trust investors in funds valued at a fraction of their original investment.

Now UK children – or more likely their parents - spend £383 a year each on technology to maintain their lifestyle in the entertainment age,according to new research from Halifax released today (Friday). This figure includes computer games and equipment, mobile phones and music downloads.

Ten years ago, few children were spending anything like £383 a year on electronic goodies and services. And if children are now laying out so much, then the adult spend is bound to be even higher. Few of us can now live without broadband and touchscreen phones.

So is this a signal that unit trusts specialising in high technology firms can be trusted again to be profitable?

Certainly, the remaining technology funds – there are nine UK funds listed on Trustnet* – have had a good year with an average growth of 52.8 per cent. Over the same period, the FTSE100 has risen 43 per cent.

Fund	Group	1y	5y	10y
AXA Framlington Gbl Technology Inc	AXA IM	61.8	89.7	-68.6
Close FTSEtechMARK	Close Asset Management(UK) Ltd	56.5	65.6	-56.7
GLG Technology Equity Professional	GLG Partners UK Limited	45.5	59.1	-54.6
Henderson Global Technology A	Henderson Global Investors Ltd	48.6	82.3	-57.7
Henderson Technology Acc	Henderson Global Investors Ltd	54.5	61.8	-67.2
Investec Global Dynamic A Acc GBP	Investec< Fund Managers (UK)	46.7	26.6	-64.1
L&G Global Technology Index Ret Acc	Legal & General UT Mgr Ltd	46.5	57.4	n/a
MFM Techinvest Special Situations	Marlborough Fund Managers(MFM)	29.5	n/a	n/a
MFM Techinvest Technology	Marlborough Fund Managers(MFM)	80.1	22.3	n/a

Can it continue? Fund manager Threadneedle thinks so. It has just launched two new specialist Luxembourg funds; Global Technology Fund, and US Communications and Information Fund.

These seek to achieve capital growth by mainly investing in US companies of any size operating in all aspects of the communications, information and related industries. Most tech funds concentrate on US equities.

Investment bank JP Morgan analysts have just doubled their estimates for computer server revenue growth this year from 6.2 to 14.3 per cent. They called this a “unique phenomenon in IT hardware.”

This comes after computer users adopted a “make do and mend” attitude during the worst of the recession. Now they are buying new equipment.

But, looking forward, growth will come from the explosion in “cloud computing” where data and other material is stored remotely. This will produce a huge demand for new computer kit – as well as new winners and losers.

The key factors for tech fund investment include:

Backing firms with a future but also looking for a strong balance sheet that generates high levels of cash to fund future developments and pay dividends. They also have less debt.
History suggests technology stocks rally strongly after market setbacks. They did well after market bottoms in 1990 and 2002.
The technology sector is more mature than it was 10 years ago – the badly financed bubble stocks have disappeared leaving firms making solid products backed by solid balance sheets for markets with solid demand.
Technology is geared to world economic recovery.
It is far more difficult to live without the internet or mobile telephony now than 10 years ago.

Anthony Yadgaroff, Managing Director at Allenbridge, the Mayfair-based discount broker says:

“The world has moved on from 10 years ago. Technology is much more embedded in our Western way of life and increasingly in that of developing nations as well. But investors can’t expect income – this is very capital growth oriented. And there are risks Most technology specialist funds are sensitive to the US economy and therefore to the dollar."

“Another potential way into technology is via a number of Far Eastern funds many of which have exposure to this sector. While no one should plunge all their savings into technology, the sector has grown up with fund managers no longer making extravagant claims or giving their funds science fiction or comic book style names.”

* As at 8 April 2010 (Trustnet). Past performance is not necessarily a reliable guide to future performance.

Contact Details:

Kate Davidson, Public Relations and Media Manager at Allenbridge Group PLC.
Mob: +44 (0)78 1462 4161
Tel: +44 (0)20 7409 1111
Kate.davidson@allenbridge.co.uk
http://www.allenbridge.co.uk/

Anthony Yadgaroff, Managing Director at Allenbridge Group PLC.
Tel: +44 (0)20 7409 1111
Anthony.yadgaroff@allenbridge.co.uk

Notes to Editors:
Allenbridge Group PLC is a rare beast in the investment jungle, a Mayfair-based discount broker that also advises large FTSE corporate pension funds and global banks. Founded in 1985, it carries out specialist research and consultancy, analysing investment manager performance across a wide range of funds: Unit Trusts, Investment Trusts, Venture Capital Trusts, Enterprise Investment Schemes, Charities, Hedge Funds, Funds of Hedge Funds and institutional Pension Funds.

In addition to providing comprehensive advice and strategic investment consultancy to leading institutions, Allenbridge also offers monitoring services, valuations and its specialised AllenbridgeCare service to individual investors on investment products and tax-shelter vehicles.

Allenbridge’s private investor division serves over 14,000 clients; retail and institutional funds under advisement exceed £25 billion.