GLG Technology Equity Fund Retail Accumulation

The pace of change in technology is breath-taking. For example, the cost of computing power continues to fall rapidly over time. According to Phil Pearson and Anthony Burton, managers of the GLG Technology Equity Fund, the current memory technology in an Apple iPod would have cost up to half a million dollars just 15 years ago!

They forecast continued rapid development in the industry through the rise of mobile computing (such as tablets and smart phones) at the expense of traditional desktop PCs. These products utilise a different range of manufacturers, component suppliers and software developers, and the managers prefer to own companies at the forefront such as Apple, ARM Holdings and Qualcomm.

Yet within this area a turf war is occurring. Apple's iPad is the dominant high-end tablet computer, and at the opposite end of the price spectrum Amazon's Kindle Fire looks likely to take considerable market share. For those left in the middle ground Phil Pearson and Anthony Burton believe times are going to be tough. Another battle is playing out over operating systems for mobile devices. Apple has its own proprietary software, but the managers believe the rival Android system developed by Google could increasingly be challenged by Microsoft's Windows based system.

Interestingly, Philip Pearson and Anthony Burton were bearish on the prospects for Microsoft when we saw them last year. Whilst they remain sceptical of most companies operating primarily in the stagnating desktop PC market, they believe Microsoft's fortunes could be improving. The firm now has a stronger foothold in the mobile devices market through a partnership with Nokia who use Microsoft software in its handsets. They haven't yet invested in Microsoft, but believe the company is becoming a more interesting proposition.

They have also grown more positive on Nokia itself, taking a small position. Nokia's share price has fallen sharply over the last couple of years as the company has undergone considerable upheaval. Yet its latest smartphone has been well received and further product improvements could help them regain market share.

The fund also has the ability to invest in telecoms and media businesses. On the former Phil Pearson and Anthony Burton are cautious, believing intense competition and increased regulation will stifle growth. On the latter they are selectively investing in companies that own important media content such as Disney and ITV. The managers believe the proliferation of content across all types of media, particularly on mobile devices, will result in the cost rising - good news for the content owners, but not for companies that have to purchase it such as BSkyB. The managers are able to invest in smaller companies which can be more volatile than their larger counterparts.

The fortunes of technology companies can change rapidly, so the expertise of a specialist management team can really help when investing in this area. It is important to note this concentrated fund does carry the additional risks of investing in a single sector, with exposure to emerging markets and the flexibility to use derivatives. It therefore should appeal to adventurous investors comfortable with these risks. We believe if Philip Pearson and Anthony Burton's positioning proves correct their fund could deliver excellent performance over the long term. It remains on our Wealth 150 list of favourite funds in each sector.