Despite being much smaller in size than the other two technology investment trusts, Polar Capital (£453m) and Herald Trust ( £414), RCM technology is a firm favourite among financial advisers who rate the experience of fund manager Walter Price highly.
Mr Price, who is based in the US, invests in companies that he believes will deliver strong total returns benefiting from themes such as the growth in data centres, outsourcing and cloud computing.
The trust, which was launched in December 1995, was down 3.3 per cent in April, underperforming its benchmark the Dow Jones World Technology Index which fell by 0.88 per cent. The shortfall can be explained by an underweight in the two strongest tech subsectors, semiconductors and communications, as well as some stock selection issues in those sectors.
On the positive side, the fund's Chinese holdings - Baidu and Sina, have performed well. Mr Price has done a bit of trimming in the cloud computing space, including holdings Successfactors and Riverbed, saying that expectations in this area have become too optimistic. He agrees that a bubble is forming in social media companies, and is sceptical about the long term viability of companies such as Groupon which he thinks is "a bit of a fad".
While Mr Price is optimistic about the sector and the record levels of cash on company balance sheets, which support a steady acquisition environment and continued investment in productivity, he does believe that expectations for many companies may have grown too high. He is remaining sensitive to valuations and market expectations while pruning the portfolio of stocks where expectations are unrealistic. The fund has also used derivatives to protect against a moderate correction in the sector.
Investors have a choice between RCM ordinary shares, currently at a discount of 8 per cent to net assets, and subcription shares.
RCM TECHNOLOGY (RTT) | |||
---|---|---|---|
PRICE | 343.5p | NAV | 374.04 |
SIZE OF FUND | £89.5m | PRICE DISCOUNT TO NAV | -8.33 |
No OF HOLDINGS: | 62 | 1 YR NAV PERFORMANCE | 22.50% |
SET UP DATE | Dec-95 | 3 YR NAV PERFORMANCE | 61.48% |
VOLATILITY | 10.52 | 5 YR NAV PERFORMANCE | 70.06% |
TRACKING ERROR | 13.19 | TOTAL EXPENSE RATIO | 1.68% |
SHARPE RATIO | 2 | GEARING | 100 |
MORE DETAILS | rcm.com |
Source: RCM Technologies, Thomson Datastream
Performance figures as at 31 May 2011
Top ten holdings (as at 28 April 2011)
Holding | Percentage |
---|---|
4.7 | |
Amazon | 3.8 |
Apple | 3.8 |
Baidu.com | 3.7 |
Sina | 3.6 |
Citrix Systems | 3.5 |
SunPower | 3.1 |
Ctrip.com | 3 |
Netapp | 3 |
Qlik Technologies | 2.9 |
Geographic Breakdown
Region | Percentage |
---|---|
North America | 71.92 |
Far East & Pacific | 18.41 |
Cash | 5.29 |
Europe ex UK | 3.34 |
UK | 1.04 |