The forthcoming Edinburgh Technology fund will focus on businesses reinvesting rather than declaring ...
The lead manager on the portfolio, to be launched on 10 April, is Alistair Currie who believes at the moment it is more important for companies to cement their market positions and raise the barriers of entry in their chosen fields. Currie said that he would be favouring businesses which spent a lot of money on marketing and research & development. He added: "Over the long term the winners will be companies which are the market leaders brought about by their spend on marketing and their competitive advantage in terms of product and their proprietary rights on that product."
One stock which will be initially held in the portfolio is London Bridge Software. The company has created and sells debt collection and credit management software. There are high barriers of entry for any start up company to enter this part of the software market, according to Currie. He said: "It would take a huge amount of money and a long time to create a similar kind of software to the one which London Bridge offers. So the company is in a very good position."
To begin with London Bridge will have a 3% weighting in the 50 stock portfolio. Only one or two companies will have a weighting above 5% and these would be large cap stocks such as Vodafone. As well as looking at a company's cash-flow the investment process includes qualitative analysis which is particularly necessary at the small end of the market, according to Currie. Other important factors include corporate governance and management track record
The portfolio is able to invest in stocks not listed in the UK and will do so by holding stocks listed in Easdaq. Initially Currie will not be investing in many traditional large cap stocks, seeing greater opportunities in slightly smaller companies such as internet security provider Baltimore which has just entered the FTSE 100. The initial market capitalisation split across the portfolio will be 30% in FTSE SmallCap, 30% in FTSE 250, 25% in FTSE 100 and 15% in Easdaq.
Currie will also be assisted on the fund by Gareth Rudd who will also focus on the small cap end of the market while Strang will focus on large cap tech stocks. Along with Graham Campbell, Strang co-manages Edinburgh UK Growth fund which has a 12% tech weighting. Over the three years the £65m fund is ranked 23 out of 226 in the Micropal All Companies sector, offer to bid. During the period it rose by 65% compared to an average rise of 44.5% offer to bid. Edinburgh has organised a series of seminars around the country where the managers will talk about the technology sector and the prospects for the new fund.
The seminars start on 10 April in Leeds and conclude on 14 April in London. Over that period seminars will also take place in Manchester, Leicester, Birmingham, Exeter, Bristol, Hertfordshire and Oxford.
Contact: 0800 917 5678.
'Right thing to do'
£69m spent on upgrades
European fintech market 'underserved'