Smith and Williamson Smaller Securities is looking to benefit from the bounce back in technology s...
Smith and Williamson Smaller Securities is looking to benefit from the bounce back in technology stocks, having suffered low returns over the past three months due to its almost 50% weighting in tech related stocks.
The fund has returned 9.1%, on a bid to bid basis over the three months to 13 September 2000 and is ranked 66 out of 75 funds in the UK smaller companies sector.
This compares to the fund's considerably better returns over one and three year periods to 13 September. The fund has returned 79.4%, on a bid to offer basis, over the past year, ranking 9 out of 75 funds and it is in seventh position over the three year period with returns of 156.9% compared to the sector average returns £94.7%.
Robert Sanders, investment director at Smith and Williamson, said: "S&W Smaller Securities did perform well for the first four months of the year and then went to sleep from May to September.
"This is because we are growth-orientated and growth stocks tend to do well at the start and end of the year, whereas value stocks are in fashion between May and September.
"It was similar last year: on 20 September 1999 we were placed 50 out of about 70 funds over three months, and were 40 and 10 over the one and three year periods up to that date. By 15 November we were second over the three month period, 12 over the year and 6 over the preceding three year period."
S&W Smaller Securities portfolio currently has an overall technology, media and telecom weighting of about 49% with information technology making up 29.9%, media at 14% and telecoms at 5%.
Sanders said he believes the outlook for UK smaller companies is positive looking forward.
He said: "Media, technology and telecom stocks will continue to do well, which will be a positive thing for smaller companies. New companies coming through in the growth sector will dominate the initial public offering. Mergers and consolidations will provide capital for smaller company managers to re-invest. The US presently has a 30% market capitalisation in technology related stocks, compared to the UK's 5%. Other markets are bound to follow the US lead.
"The internet will benefit from this trend: there will be more avenues with which to distribute content and so there will be more ways to increase revenues without any more cost."
Sanders said S&W Smaller Securities, which has about 80 stocks in its portfolio, maintains its growth bias as it likes to pick companies in rapidly expanding industries.
One such industry which S&W are particularly interested in is telematics, which Sanders predicts will increase its current value of £1bn to £20bn in four or five years time.
Telematics is involved in technology that tracks the speed and location of cars. Telematics should, in the future, help police solve car crime and have the knock-on effect of lowering car insurance, he said.
S&W has bought two UK telematics companies, Yeoman Group and Minorplanet. According to Sanders, S&W are looking to increase its exposure to this area of the market.
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