Despite a shakeout in technology stocks over recent weeks, dedicated European technology funds are t...
Despite a shakeout in technology stocks over recent weeks, dedicated European technology funds are the latest fad among product providers, eager to capitalise on a "catch up" phase in the technology revolution.
Without an overall technology index within Europe, it is difficult to gauge the exact growth in the market. The Fleming European Technology Fund, a euro-denominated fund domiciled in Luxembourg and launched in November 1999, was up by 199.4% in sterling terms, offer to offer, since launch on 8 November to 10 April. This compares to a 12.5% increase in the FTSE World Europe Index in sterling terms, offer to offer, over the same period.
On 17 April, Royal & SunAlliance, launched its EuroTech Fund, a unit trust to be managed by Stephen Martin, holding around 50 stocks and investing in both large and small technology companies in continental Europe and the UK.
Martin says Europe has lagged the US in exploiting the commercial potential of the internet, and its late development should benefit technology companies in countries where there is currently low internet penetration.
Such countries include Italy, France and Spain, where internet penetration is a below 10% versus 40% in the US.
Martin says: "Future users will be able to get online on their phones or televisions. This will be to the advantage of European companies, rather than the US giants of the PC generation."
He also argues that despite recent volatility, the sector continues to show promise. He says Europe is a leader in pharmaceuticals, aerospace and mobile telephony, so there is strong argument for a fund dedicated to this market.
Martin says: "Although the US is commonly considered the global leader in technology, in certain industries European companies lead the world. For example Europe is a leader in GSM (digital mobile transmission), which has resulted in high penetration and driven the swift development of handsets, infrastructure and services."
Meanwhile, Schroders also plans to launch a dedicated European technology fund on 29 May. To be called Schroders EuroTech, the unit trust will run by Michael Grant.
The portfolio will focus on pure technology companies, as well as new and emerging industries where growth prospects have been enhanced by technology developments.
Robin Stoakley, client services director at Schroders, is optimistic on the European technology market, saying in 1999, 60 technology companies came to the market, while this year some 200 are expected to emerge.
He says: "We know technology is popular but the first wave, where anything with dot.com or tech in its name went up, is over and we are now in the second wave, where investment has to be more specific to achieve growth."
Aberdeen Asset Managers recently altered the mandate of its European Special Opportunities fund and renamed it the Aberdeen European Technology fund. Managed by Ed Protheroe, the portfolio had 87% invested in European technology stocks as at the end of December 1999. Under the new mandate, the fund is 100% invested in technology stocks.
Launched November 2018
£15m group claim
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