RCM Technology Trust has reported strong returns on both an absolute and relative basis during the six-month period to 31 May 2013 as the trust profited from several holdings identified as benefiting from particular secular growth trends.
The investment portfolio, managed by Allianz Global Investors, has seen its net asset value per ordinary share rise by 27.3 per cent from 352.6p to 448.7p, outperforming the Dow Jones World Technology Index, which rose by 15.8 per cent in sterling terms.
Key drivers for the trust’s strong performance during the six months to 31 May 2013 include a bias toward mid cap technology stocks, as well as identifying companies relatively early on in their growth stages, offering the bets opportuity for outperformance over the long term. . An important part of the strategy is investing in companies that use technology in an innovative way to gain a strategic, competitive edge. Tesla Motors, the electric vehicle and powertrain manufacturer is one example which fulfils this criteria, and was amongst the largest contributors to active returns.
David Quysner, chairman of the RCM Technology Trust, says: “Against a backdrop of continuing uncertainty over the economic outlook, our fund managers are still able to identify growth opportunities in the technology sector. The Trust has tended to have a significantly higher than benchmark allocation to high growth, mid cap companies which are considered to be the emerging leaders in the technology sectors.”
Portfolio manager Walter Price says: “Equity markets have reacted positively to improving visibility on a number of the economic and political challenges impacting the global economy over the past few years. We believe the technology sector is especially well-positioned to benefit from additional clarity and further progress on these issues.
“Broadly, we think technology companies should benefit from an improvement in business technology spending trends over the coming years; currently, US corporations have record amounts of cash on their balance sheets after severe under investment in technology for the past few years. We expect companies to start increasing their technology spending particularly on consumer-facing software solutions.
“We also think there are certain secular growth areas within technology that should gain further momentum especially in a more pro-investment environment. These are companies we believe will demonstrate above-sector growth through the introduction of a differentiated technology or experiencing robust business momentum. We have positioned our portfolio to benefit from areas of secular growth such as cloud computing, communications infrastructure upgrades, and applications on smartphones and other mobile devices.
“We acknowledge that risks are still present in the form of uncertainty regarding the full implications of federal spending cuts in the US as well as the potential for stalled policy or economic progress in Europe and Asia. Still, with low valuations and growing yields, many tech stocks have good support. We believe that the ongoing alleviation of these risks, improved corporate demand, and certain unique growth drivers could set the stage for the next secular bull market in technology.”