Skip to main navigation or content
You are here:
My parting shot in last month's column (Taking profits and backing winners) was that I had added to the existing holding of Polar Capital Technology Trust (PCT) within the growth portfolio. You'll notice that both portfolios hold this trust, and there are some good reasons for that.
Advertising
I've suggested before that investors can expect below average growth in the western economies for some years to come as consumers, businesses and governments pay off their huge debts. In such an environment, investors will be rewarded for identifying those stocks that deliver above-average growth. This is where the technology sector comes in.
The sector has come a long way since the tech bubble burst in March 2000, and is now in much better shape. As Investors Chronicle pointed out recently (Time for tech, 5 Feb 2010), business models that relied on continual injections of fresh funds have gone, replaced by cash-generative operations and strong balance sheets. For example, software titan Microsoft has $30bn in net cash, while networking giant Cisco has $25bn.
Meanwhile, a new technology cycle is unfolding. Corporate investment in technology has fallen significantly in recent years, with some experts suggesting that spending as a percentage of GDP is at a near 40-year low. This ageing equipment will have to be updated – a process helped by the fact that, because of advances in technology, the payback period is much quicker than it used to be. In a slower growing economy, the need to increase productivity will be paramount, and technology will be a key driver.
What else? Find out more about the case for technology, the performance of the investment trust portfolios and other recent changes - read the full article on our website!
Celebrate our 150th anniversary with fantastic savings on a joint magazine and IC Advantage subscription.
Free access to financial data, charts, portfolio tools and more - registration is quick, secure and free!
Profit from IC share tips; discover the benefits of IC Advantage and sign up for a free trial.
Use the links below to find key market data and portfolio functionality. Registration (free) may be required for some services.
© The Financial Times Limited 2010. All rights reserved. "Investors Chronicle", "FT" and "Financial Times" are trademarks of The Financial Times Limited. No part of these web pages may be reproduced or transmitted to or stored in any other website or other form of electronic retrieval system, without prior permission in writing from the editor.
Warning: Do remember, particularly if you are new to stock market investment that the prices of shares and other investments can fall sharply. You may not get back the money you originally invested. The material here is for general information only and is not intended to be relied upon for individual investment decisions. Take independent advice before making such decisions. This site is aimed at UK residents only. To read more please see our Important Warning
-IC-2.1.2b-prod - 09/03/2010 18:13:54 - ben.wheeler
