Henderson Global Technology Fund research update

Technology is having an ever-increasing impact on everyday life and there is virtually no area of the economy which isn't being infiltrated to some degree by technological progress.

The shares of technology-related companies have generally performed well over the past year. The MSCI AC World Information Technology Index has delivered growth of 29.4% compared with 19.6% for the broader MSCI AC World Index.

Over this period the Henderson Global Technology Fund, managed by Stuart O'Gorman and Richard Clode, underperformed with growth of just 18.6%*. The managers cited the internet, software and hardware sectors as contributing to the underperformance.

Performance of the Henderson Global Technology Fund over the past year

Past performance is not a guide to the future. Source: Lipper IM *to 02/02/2015

During 2014 the managers did not have enough invested in Intel, the computer-chip maker, for example. The company performed well following news it was benefiting from stronger demand for PCs. An investment in Pandora, the US-based internet radio service, also disappointed after its number of active listeners fell short of expectations.

In contrast, the fund's investment in Facebook performed well after the company made progress in its efforts to make more money from customers accessing the site on their mobile phones. Stuart O'Gorman and Richard Clode have also recently invested in YY, a Chinese social network. Like Facebook the company is increasingly finding ways to monetise its user base and grow revenues.

Elsewhere, the managers recently sold their investments in Symantec, the IT security company, and Netflix, the video streaming service. The former was sold following the departure of its CEO, and the latter over concerns about its international growth.

Looking ahead, the managers believe some companies need to start delivering earnings growth to justify some of the recent share price rises, but overall they believe the technology sector looks attractive. They suggest demand for technology products and service in the US remains robust, while they are finding companies with strong balance sheets and earnings growth potential.

Our view on this fund

We like the managers' approach of focusing on companies with great products and a competitive advantage, which could fuel growth. The managers construct the portfolio with reference to the benchmark index, meaning the investments in the fund are unlikely to deviate significantly from the benchmark. This means the fund could be less volatile relative to the index than some peers, but we tend to prefer a more unconstrained approach. Over the past five years the fund has delivered attractive absolute returns, but it has underperformed both its benchmark and the peer group over this period; however, this should not be seen as an indicator of future returns.

Performance of the Henderson Global Technology Fund over the past five years

Past performance is not a guide to the future. Source: Lipper IM *to 02/02/2015

Overall, we view this as solid technology-focused fund, but it does not currently feature on the Wealth 150 list of our favourite funds across the major sectors.

Find out more about this fund including how to invest

Please read the key features/key investor information document in addition to the information above.