Press releases
08 February 2012
Is the technology sector back in vogue?
Facebook IPO directs focus onto technology stocks
The technology industry has been brought into the spotlight following last week’s announcement on the planned IPO of the ubiquitous social media site, Facebook. Indeed, Walter Price, manager of the RCM Technology Trust has said he believes that, ''Facebook could be one of the most important companies to emerge from Silicon Valley, RCM's backyard, in history.''
Following the tech boom and bust, investors have tended to be more cautious about technology shares. However, the advent of social media in particular has led to a renewed interest in technology and firms such as Google, Apple and Groupon have recently signed leases for new premises in London to accommodate their expansion.
Ben Rogoff, manager of the Polar Capital Technology Trust commented that: “The Facebook IPO is a good opportunity for investors to reconsider the merits of the technology sector, which despite better growth prospects and a vastly superior aggregate balance sheet trades broadly in line with the market multiple. It is also a timely reminder that a new technology cycle is continuing to unfold driven by cloud computing, broadband applications and mobile data.
“Specifically we've been adding to our networking exposure, as we are hopeful that US service provider spending will improve through the year. We've also added to our semiconductor exposure as a cycle low is in this quarter, and also semiconductor equipment companies due to rising capital intensity as manufacturing moves to smaller nodes.”
James Anderson, manager of Scottish Mortgage Investment Trust commented: “Amidst the fashionable and exaggerated gloom it is the accelerating pace of change in technology and dramatic innovation that should give the pessimists most cause for thought. Innovation is transforming our societies and generating fabulously strong companies with remarkable economics and superb growth prospects. The leaders are broadening out from being dominated by electronics into fields as diverse as social media and healthcare (from genomics to robot surgery) and with China joining the West coast of America as a driver of rapid and disruptive change.”
On Facebook’s success, Walter Price, manager of the RCM Technology Trust elaborated: ''We think Facebook is one of the most exciting companies to come public in this decade. Users are constantly updating the information on their pages and, by parsing this information, Facebook has a database of hundreds of millions of people that is fresh and unique. Using this data well should allow advertisers to target product introductions, build loyalty to their products, and establish a relationship with their best customers that they never had an opportunity to do in the past. ”
Performance figures for technology focused investment companies (share-price total return on £100, less 3.5% for expenses – figures to 31 January 2012)
|
Duration (Years)
|
1 year
|
3 years
|
5 years
|
10 years
|
|
Overall Weighted Average - average investment company (excluding 3i)
|
92.6
|
153.73
|
104.06
|
197.85
|
|
Herald Investment Trust (Sector Specialist: Small Media Comms & IT Cos sector)
|
90.68
|
248.49
|
119.9
|
163.76
|
|
Polar Capital Technology Trust (Sector specialist: Tech, Media & Telecomm sector)
|
90.36
|
232.2
|
140.62
|
166.43
|
|
RCM Technology Trust (Sector specialist: Tech, Media & Telecomm sector)
|
86.98
|
149.97
|
131.5
|
92.07
|
Discounts
|
Discount
|
7 Feb 2012 (estimate)
|
12 month average discount (to end Dec 2011)
|
|
Herald
|
-17.3
|
-17.4
|
|
Polar Capital Technology
|
-4.4
|
-1.3
|
|
RCM Technology
|
-14.5
|
-6.7
|
- Ends -
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Notes to Editors
1. Performance data is to 31 January 2012 and is mid-market share price with net income reinvested and a 3.5% deduction for charges, stamp duty and market spread. Source: AIC using Morningstar. Discount figures are AIC using Morningstar.
2. Discrete annual returns – share price total return on £100, less 3.5% for expenses, on same basis as previous figures
|
Performance From
|
31/01/2011
|
31/01/2010
|
31/01/2009
|
31/01/2008
|
31/01/2007
|
|
Performance To
|
31/01/2012
|
31/01/2011
|
31/01/2010
|
31/01/2009
|
31/01/2008
|
|
Duration Years.Months
|
1
|
1
|
1
|
1
|
1
|
|
Average investment company
|
92.6
|
118.37
|
130.65
|
65.5
|
93
|
|
Herald
|
90.68
|
145.3
|
175.64
|
63.71
|
70.53
|
|
Polar Capital Technology
|
90.36
|
151.09
|
158.38
|
78.99
|
71.4
|
|
RCM Technology
|
86.98
|
126.59
|
126.84
|
83.2
|
98.14
|
3. The Association of Investment Companies (AIC) was founded in 1932 to represent the interests of the investment trust industry – the oldest form of collective investment. Today, the AIC represents a broad range of closed ended investment companies, incorporating investment trusts and other closed ended investment companies and VCTs. The AIC’s members believe that the industry is best served if it is united and speaks with one voice. The AIC’s mission statement is to help Members add value for shareholders over the longer term. The AIC has 345 members and the industry has total assets of approximately £90.3 billion.
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