The RCM Technology trust is currently holding higher levels of cash in preparation for opportunities created by further market falls.
Walter Price, manager of the £55.1m trust, says a number of technology sector segments are looking attractive despite a downturn in economic activity – including consumer-related technology, solar power and strong internet growth in China.
“We cannot ignore the economic environment we are in and the fact the full impact of last year’s liquidity crisis may not yet have been felt,” Price says.
“As a result we are likely to see company information technology budgets for 2008 under close scrutiny and, in many cases, cut.
"However, in these more difficult times, investors have historically favoured companies capable of maintaining sales growth through product innovation. Corporate activity could also increase further, as seen in the purchase of BEA by Oracle, and Microsoft’s bid for Yahoo.”
Price took control of the trust in May 2007, rebalancing the portfolio to a significantly higher weighting in larger capitalisation securities and reducing exposure to the UK and Europe. The trust’s net asset value per ordinary share was up 15.3% in the year ended 30 November 2007.
"Our belief is that any downturn will be relatively mild compared to past recessions and many of our favoured growth companies could rally quite sharply in the second half as investor appetite for higher growth companies improves with the prospect of a more stable economy in 2009,” Price says.
"Recent falls have created opportunities to buy selected stocks in the technology area at low valuations relative to their prospective growth rates. Market falls will create buying opportunities."
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First mentioned in Cridland Report
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