Scudder has launched a Luxembourg-based Technology fund and is set to launch a Life Sciences fund du...
Scudder has launched a Luxembourg-based Technology fund and is set to launch a Life Sciences fund during September. Both will be based on existing US mutual funds.
The Scudder New Technologies fund, part of the group's Global Opportunities umbrella, is managed by J Brooks Dougherty. In the Scudder style the fund is run on a bottom-up basis, the managers searching for individual companies with innovative products and services, good business models, strong management and solid positions in their core markets.
The approach is based on fundamental momentum/ growth stock investing rules. The managers prefer companies with earnings growth rates in excess of 15%. While the approach is strongly bottom-up focused, the team develops an investment thesis for each industry sub-sector and a rationale for the weighting in that sub-sector. Depending on the outlook, the weighting to a particular industry may be increased or reduced.
Strategy for the third quarter will involve a slight overweight in semiconductors, with a focus on those names likely to produce strong earnings going forward. Another area of focus is producers of optical components. Examples include SDL and JDS Uniphase.
Favoured software stocks include storage management company Veritas and customer relationship management stock Siebel. Dougherty is underweight in telecommunications equipment due to his belief that handset sales forecasts will be coming down, and in computer hardware manufacturers, where margins are under pressure.
The New Life Sciences fund will be managed by James Fenger. It will focus on companies with new and innovative products and services that are cost effective and that address therapeutic voids. The weightings are primarily a function of the fund's bottom-up selection process, but the initial sector breakdown is likely to be biotechnology 27%, medical devices and supplies 17.7%, US major pharmaceuticals 19.5%, specialty pharmaceuticals 15%, life science instruments 11.1%, Japanese pharmaceuticals 6.5% and cash 3.2%.
Fenger believes five drivers are fuelling the momentum for life sciences stocks- the completion of the human genome project, the high profitability of pharmaceutical companies, demographic trends, and rising sales forecasts for biotech-derived products as well as joint ventures and industry consolidation.
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