AXA Framlington fund manager shares his top technology stocks
19th September 2013 15:07
Jeremy Gleeson, fund manager of the , explains his investment strategy and why he thinks growth technology stocks are ripe for picking.
The £220 million fund's top holdings include , , , , , , and .
Over one year, the fund has returned 8.9% compared with 17.3% in the UT Technology and Telecoms sector as at 18 September.
Gleeson is identifying new opportunities and trends in the technology market such as cloud computing.
He says: "Cloud computing [is] a key innovation that has spurred significant changes in the lifestyles of businesses and individuals.
"Cornerstone OnDemand, a software-as-a-service company, is an example of a business that is benefiting as companies take advantage of cloud computing, being largely used by HR departments for online training purposes."
Gleeson identifies a number of "compelling themes" in global technology. These include social media, which is gaining interest especially with Twitter's upcoming initial public offering.
Other themes include cyber security; data protection is important because, as businesses carry a wealth of data, companies are deploying methods to stop cyber attacks.
Gleeson comments value stocks have seen strong performance over the last 12 months - however these stocks are now starting to look expensive, trading above historic levels.
He adds: "Meanwhile, growth stocks are currently trading at a significant discount to their 20-year average on a P/E (price/earnings) basis.
"With signs of an improving economy in the US, UK, Europe and even tentative signs of a pickup in China, it is the growth area of the technology market that will be best placed to provide greater capital returns to investors."
He explains large cap names have been in favour during the recent period of economic uncertainty, however these stocks are not showing the growth they used to and investors are now in a position to be better rewarded by picking small and mid-cap companies.
Increase in M&A activity
Gleeson adds: "In addition, many large caps are generating high amounts of cash and will be looking to make acquisitions to help stimulate their growth.
"It is the best-of-class small and mid-cap stocks that will be the most attractive targets and investors in these companies are most likely to benefit from any M&A activity, in my opinion."
An ideal M&A example he gives is the recent acquisition made of , an intelligent cybersecurity solutions provider.
In terms of regional weightings, the fund is 84.5% exposed to the US, 2.6% UK, 2.1% Sweden, 1.8% Israel, 1.5% Taiwan, 1.5% Singapore, 1.4% China, 1.2% Germany, 1.7% Money Market and 1% other.
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