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Are you invested in the technology sector? It might pay to double check

Are you invested in the technology sector? It might pay to double check

12 June 2019

No news or research item is a personal recommendation to deal. All investments can fall as well as rise in value so you could get back less than you invest.

Investing in a fund is a good way of diversifying your portfolio. But if you stick to just UK funds you could be missing out on exposure to one of the world’s fastest growing sectors – technology. You can check how much of your portfolio’s invested in different sectors by using the ‘Portfolio Analysis’ tool when logged into your HL account.

A fund that tracks the broad UK market will only have about 1% invested in technology. When the sector’s outperforming the wider market, as it has over the long-term, you could be missing some returns – although of course it also means you’ll miss out on poor performance when tech stocks struggle. Do remember though that past performance isn’t a guide to the future.

Leveraging tech

Your investment returns can still get a technological boost even if you don’t invest directly in tech companies. Rightmove’s a prime example. It’s not included in the technology sector but technology is at the heart of what it does. In days gone by, people wanting to buy or rent a house would loiter at estate agent’s windows checking what they had to offer. Now you’re much more likely to go online to see what’s available.

However, the UK market does lack direct tech companies that sell computer hardware, software or services, and some investors may want to allocate more than 1% of their portfolio to this type of business.

So how do you get exposure to these companies?

All investments fall as well as rise in value, so you could get back less than you invest.

Specialist technology funds

One option is to invest in a specialist technology fund. We tend not to find too many managers in the sector that consistently outperform the broader market but think Polar Capital Global Technology is among the best actively managed funds.

You could also consider a specialist tracker fund such as the Legal & General Global Technology Index. It aims to copy the performance of the FTSE World Technology Index. There’s no need to spend money on researching which stocks might have the greatest potential which helps keep the fund’s charges down. Please note the maximum annual HL management charge of 0.45% will also apply.

Specialist funds can be a great way to tailor your portfolio’s exposure to a particular area, but we don’t think they should take up too much of your portfolio. Investors should aim to achieve a balanced level of exposure to the technology sector in the same way they would to any other industry. This article is also not personal advice. If you are unsure whether an investment is right for you, please seek advice.

Annual percentage growth
May 14 -
May 15
May 15 -
May 16
May 16 -
May 17
May 17 -
May 18
May 18 -
May 19
Legal & General Global Technology Index 27.1% 2.0% 53.1% 20.8% 6.6%
Polar Capital Global Technology 28.8% 5.8% 59.1% 28.3% 9.4%

Past performance is not a guide to the future. Source: Lipper IM 31/05/14 to 31/05/19

More on POLAR CAPITAL GLOBAL TECHNOLOGY, including charges

Polar Capital Global Technology Key Investor Information


More on LEGAL & GENERAL GLOBAL TECHNOLOGY INDEX, including charges

Legal & General Global Technology Index Key Investor Information

North America – home of the tech giant

Another low cost way to increase technology exposure is to invest in a fund that tracks the broad US stock market. Our favourite is the Legal & General US Index. This fund will give you more than just technology exposure as it tracks the entire US stock market. But the world’s biggest tech firms are based in the US and 22% of the fund is invested in the technology sector so it’s likely to add tech exposure to a portfolio that’s underweight the sector.

Annual percentage growth
May 14 -
May 15
May 15 -
May 16
May 16 -
May 17
May 17 -
May 18
May 18 -
May 19
Legal & General US Index 22.6% 4.7% 32.8% 11.2% 8.7%

Past performance is not a guide to the future. Source: Lipper IM 31/05/14 to 31/05/19

More on LEGAL & GENERAL US INDEX, including charges

Legal & General US Index Key Investor Information


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Investment notes
No news or research item is a personal recommendation to deal. All investments can fall as well as rise in value so you could get back less than you invest.
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