The GLG Technology Equity Fund has been removed from the Wealth 150 list of our favoured funds for new investment. The Wealth 150 comprises fund managers we believe are able to add significant value to the returns of their relevant benchmark and outperform over the long term. We have lost conviction in the ability of Anthony Burton and Phil Pearson, managers of the GLG Technology Equity Fund, to achieve this.
The chart below shows the performance of the GLG Technology Equity Fund relative to the IMA Technology & Telecoms sector; it highlights the under or over performance of the fund over five years. When the line is rising, the fund is outperforming the peer group, when it is falling, it is underperforming. Performance of the fund has been inconsistent over this period and our analysis suggests the managers have added very little value through their stock picking ability since 2011, their positioning within the sector has also had a negative effect on returns over this time.
Performance of the GLG Technology Equity Fund relative to the IMA Technology & Telecoms sector over 5 years
The fund had a particularly torrid time in 2014, losing 20% in value in just over 2 months. The managers were expecting a selloff in technology stocks and so took some profits from the holdings they believed would be the most affected. However, the managers admit they were not positioned defensively enough and when share prices fell further than anticipated, the fund fell considerably further than the MSCI ACWI/ Information Index benchmark. The fund managed to re-coup much of the loss to finish the year 9% ahead, but underperformed the index by 15.76*%.
Overall this is a concentrated portfolio, containing 40 to 60 stocks and the managers have the flexibility to use derivatives and invest in emerging markets, all of which increases risk.
Percentage growth of the GLG Technology Fund over five years
Past performance is not a guide to future returns. Source Lipper IM * to 02/01/2015.
|Annual percentage growth|
| Jan 10 -
| Jan 11 -
| Jan 12 -
| Jan 13 -
| Jan 14 -
|GLG Technology Equity||25.42%||-1.69%||10.87%||23.26%||9%|
|IMA Technology & Telecoms||26.27%||-3.7%||9.81%||25.72%||13.7%|
|MSCI ACWI/Information Technology||14.77%||-3.72%||12.37%||21.17%||24.76%|
While we continue to believe this adventurous fund is a good choice for exposure to this innovative and exciting sector, the Wealth 150 is reserved for funds with managers in which we have the highest conviction. While we initially felt the managers had the ability to add value over the long term, the fund has failed to add sufficient value for the fund to be included in the Wealth 150.
Presently, we do not feature any other technology funds on the Wealth 150. However, there are a number of actively managed funds in this sector, outside the Wealth 150, which are available to view here, alongside tracker funds and ETFs which aim to track a particular index of stocks. Investors should ensure the aim of the fund or ETF continues to meet their objectives.
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