During the internet boom, from 1996 to 1999, if you invested in a technology fund, there is a fair chance you might have been successful due to speculation and over valued stocks.
Speak to an investor who got involved in tech funds during the post-millennium period, and you could encounter a less than enthusiastic response, as the bubble was seen to burst in March 2000.
Now, tech funds still have a reputation for being among the most volatile investment options, but this must be put into context.
Tech funds can still be seen as a sound long term option, and it should be remembered that if a tech fund has dropped say 10% over a short period, but the average tech fund has dropped by 20%, this may still reflect good performance.
It is worth making sure you have sound financial advice before investing any considerable sums in this area, and ensuring you have a diversified investment portfolio.
Let’s look at five funds which currently invest in technology companies, and their characteristics:
Vanguard Information Technology Index (VITAX)
This fund uses an investment approach based on indexing to track the MSCI US Investable Market Index (IMI)/Information Technology 25/50, which consists of the stocks of US companies; from SMEs to large organisations.
It is a non-diversified fund which invests all of its assets in the stocks which comprise the index.
Red Oak Technology Select Fund (ROGSX)
With an objective of achieving long-term capital growth, this fund invests the majority of its net assets in technology companies’ equity securities – at least 80 percent.
While it focuses on US companies’ common stocks, there is also the possibility of it making investments in foreign companies’ common stocks, as well as American Depositary Receipts which meet the fund’s investment criteria.
Fidelity Select Semiconductors Port (FSELX)
This fund’s investment looks for capital appreciation and typically invests in common stocks.
It focuses on investing 80 percent or more of its assets into securities of technology companies involved in designing, manufacturing and selling electronic components, as well as equipment vendors, electronic systems vendors, electronic instrument vendors and electronic component distributors.
This non-diversified fund analyses the industry status and financial position of technology companies, as well as economic conditions in a number of countries, in the process of selecting its investments.
Fidelity Select Software and IT Services Portfolio (FSCSX)
Investing primarily in technology companies involved in software and information services, the Fidelity Select Software and IT Services Portfolio has assets totalling $4.10 billion as of April 2017.
Some 88 percent of its holdings are in biotech, with the other 12 percent in pharmaceuticals. The fund requires a minimum investment of $2,500, and its top holdings include the likes of Google, Facebook and Alphabet.
This venture capital fund makes seed-stage and early-stage investments into technology companies.
If you are wary of a risky investment, you might want to steer clear, but for those who want to identify ‘the next big thing’, Garage Technology Ventures specialises in finding those game-changing ideas.
The fund invests in “unproven teams attacking unproven markets with unproven solutions”.
Other tech funds to consider
Other tech funds you may be interested in are those such as Henderson Global Technology. This fund invests mainly in international equities of companies. The 5 top holdings are the following companies: Apple, Facebook, Microsoft, Google (Alphabet), and Samsung.
One thing to be aware of are the different fees associated with each of these options for UK investors.Last updated: August 3rd, 2017