The technology sector in 2012 has been beating the broader equity market. Find out which funds outperformed.
Author : Nick Tay
If Year = 2012 Then Technology Funds = \(^_^)/
Key Points
Year-to-date, the global tech sector return of 8.9% has outperformed the global equity market return of 2.54% (as at 7 August 2012)
Among the funds distributed on our platform, Henderson Global Technology has shown 5-year annualised returns of 0.13% versus the MSCI World IT 5-year annualised retun of -1.81%
Stuart O’Gorman, lead manager for Henderson Global Technology, has shown the ability to remain ahead of the curve by making accurate market calls over the 3 years we’ve been tracking his views
Technology investors have had a good run in 2012.
Year-to-date (as at 7 August 2012), the technology sector, represented by the MSCI World IT index, has returned 8.90% while the global equity market, represented by the MSCI AC World Index, returned 2.54% (figures in SGD terms, dividends reinvested).
Being a technology investor has not been easy over the past 5 years. Defying fundamental improvements in consumer and corporate demand for IT goods, and developments in cloud computing and e-commerce, the tech sector recovery was derailed by the global financial crisis of 2008, and hit again in 2010-2011 with the European debt crisis.
Table 1: Calendar year performance, end-2006 to ytd-2012
Name
2007
2008
2009
2010
2011
2012 YTD
MSCI World IT
6.74%
-44.56%
55.07%
2.03%
-3.21%
8.90%
Henderson Global Technology
14.71%
-42.31%
54.44%
3.60%
-2.08%
7.80%
Aberdeen Global Technology
2.08%
-42.91%
51.00%
10.49%
-2.09%
4.19%
Fidelity Global Technology A EUR
10.80%
-46.82%
57.05%
2.47%
-8.62%
6.03%
United Global Technology Fund
11.55%
-40.67%
43.23%
2.54%
-15.36%
6.45%
MSCI AC World Index
3.34%
-44.21%
28.69%
1.32%
-8.48%
2.54%
year-to-date as at 7 august 2012. source: iFAST compilations, in SGD terms, dividends reinvested.
Yet, despite the ups and downs in the past few years, the global technology sector has beaten the global equity market in 2007, and from 2009 to 2011. Technology funds have also turned in decent performances over the past 5 years, led by Henderson Global Technology, our recommended fund for the technology sector in 2012.
Over a 5-year annualized basis, Henderson Global Technology tops Table 2, with an annualized return of 0.13% versus the MSCI World IT index return of -1.81%. Other than Henderson Global Technology, another fund which has held its own against the index is Aberdeen Global Technology, which returned an annualized -1.31%.
Table 2: 5-year annualised returns, 7 Aug 2006 to 7 Aug 2012
Name
Return
Henderson Global Technology
0.13%
Aberdeen Global Technology
-1.31%
MSCI World IT
-1.81%
Fidelity Global Technology A EUR
-3.32%
United Global Technology Fund
-4.20%
as at 7 august 2012. source: iFAST compilations, in SGD terms, dividends reinvested.
With strong annualized performance from Henderson Global Technology putting it head and shoulders above the competition, one point of note is the lead fund manager’s willingness to make unambiguous calls on the overall tech market over a 12-month period – calls we’ve been tracking since 2008. Staying Ahead of the Curve Since 2008, we’ve been interviewing Stuart O’ Gorman, Director of Technology with Henderson Global Investors, and over the past three years, he’s proven to have an uncanny knack staying ahead of the curve, as shown in Table 3.
Table 3: Quotes from interviews, 2008 to 2011
Date
What he said
What happened
Oct 2008
"the whole market is going to sell off hard probably for the next 3 to 6 months"
The MSCI World IT index fell -17.36% over the next 6 months
Jun 2010
"(Over the next 12 months) we're pretty bullish on tech"
The MSCI World IT index rose 5.66%
Jun 2011
"Tech will outperform on a relative (to global equities) basis. over the next 12 months, Tech will outperform by about 10%"
The MSCI World IT Index (3.15%) outperformed the MSCI AC World Index (-11.47%) by 14.62pp
Percentage points, pp, is the arithmetic difference between two percentages.
source: iFAST compilations, in SGD terms, dividends reinvested.
And while we must point out it’s highly unlikely any fund manager can accurately forecast the direction of the market with 100% accuracy, Stuart’s calls have been uncannily on the mark for the past three years, and it certainly hasn’t hurt the performance of Henderson Global Technology.
If you’re an investor looking to the tech sector for returns, Henderson Global Technology offers access to an experienced team of cagey veterans that have demonstrated the ability to outperform the market.
Nick Tay is part of the Content Team in iFAST Financial Pte Ltd.
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