Fund Objective

The Fund aims to achieve capital growth through investing in an international portfolio of companies involved in high technology industries.

View on Past Performance

During the third quarter technology stocks, and markets in general, slumped in what was an extraordinary period as investors questioned the future stability of the global banking system. In addition to the financial crisis, technology sector volatility was exaggerated by the ban on the shortselling of stocks in the financial sector, which led to hedge funds switching their short-selling attention to the technology sector.Whilst spending by consumers on technology products has weakened, albeit with the exception of buyers of Apple's new iPhone, corporate spending has so far remained healthier than many people expected.Industry leaders Cisco, Hewlett-Packard, Dell and Oracle all reported results that showed US corporate sales were, at the least, in line with earlier estimates. Although sales are taking longer to close, deals are still getting done. A further sign of confidence in the sector's outlook is the news that both Microsoft and Hewlett Packard announced new share buybacks totalling $48 billion.However, corporate spending outside the US has weakened as European and Asian companies have become more cautious. This scenario is reflected in the portfolio which is much more focused on US domestic corporate demand.

Future Expectations

Whilst the problems facing the banks should not be underestimated, it is encouraging that the issues are being recognised quickly and solutions are being put in place.In the aftermath of the 1990's Japanese real estate bubble, the banks delayed facing up to their problems such that five years after the peak they had only written off 30% of the final losses and this widespread weakness in the banking sector dogged the Japanese economy for a decade or more. In contrast, in the US, 45% of the losses (according to Merrill Lynch) have already been written down and the impact on the economy is likely to be short-lived.The enormous global banking bailout and rescue plans that have been announced should enable the health of the banking system to begin its recovery and get banks to start lending again. Whilst we wait to see what lasting damage has been done to the wider economy, current stock valuations are already appear to be pricing in a worst case scenario.During the last quarter, hedge funds have created significant selling pressure as they have been forced to reduce their levels of gearing and also raise cash to meet widespread redemptions (possibly as much as 10% of total funds in September alone). This will likely tail off in coming weeks removing significant pressure on share prices.

Fund Details