There may not be a need for nall clients to have a general technology fund in a portfolio, according to the guests on the latest FT Adviser podcast, as the US equity index is already dominated by large technology stocks.
Global technology companies are predominantly listed in the US and dominate an index which is hard to outperform.
This means owning both a US fund and a technology fund may be unnecessary, according to the guests.
Fahad Hassan, chief investment officer at Albemarle Street Partners, said owning a passive US fund was sufficient.
He said: “Given the huge proportion of the biggest technology stocks that are listed in the US large cap index, and given how hard it is to outperform the US large cap index, we think the best way to get technology exposure is through US passive strategies, and so don’t tend to allocate to a dedicated technology fund.”
Similarly, Alex Illingworth, founder and fund manager at Goshawk, said: “Around 83 per cent of the global IT sector is US listed companies, so its a big part of the index, and means the index is quite correlated, and those companies are obviously quite correlated.”
Mark Hawtin, who runs the Liontrust Global Alpha fund, added the tech stocks had an impact on other stocks, which could help investors benefit from them without directly investing in tech.
He said: “Over my years in the market, what I think has changed is that technology companies are enablers for other businesses, so you can create a balanced portfolio that benefits from technology without just being in the technology stocks.”
You can listen to the full podcast by clicking on the link above.
