Interactive Investor

Six stocks and funds to connect with the "internet of things"

19th August 2014 10:02

David Prosser from interactive investor

The next big digital development looks set to be the "internet of things" - that is, a world in which everyday objects contain technology that connects them online.

The merger of British retailers Carphone Warehouse and Dixons, to be named Dixons Carphone (DC.), aims to take advantage of this innovation by bringing their consumer electricals and mobile technologies businesses together. However, many other large US corporations like Google, Amazon, Apple and Microsoft, will inevitably be challenging for supremacy as well.

So how do investors capitalise on these trends? Well, there are undoubtedly opportunities to be found in small companies at the cutting edge of connected home technologies - either because of the rapid growth these businesses can generate or, more likely, because they'll be acquired by larger companies that want their expertise - just as Google bought Nest Labs.

David Prosser identified four stocks and two funds that could be profitable for investors seeking exposure.

Quindell

Best known as an outsourcing company, Quindell's close relationship with the insurance sector has seen it become a really innovative player in the field of telematics: the potential for its technology solutions to power much more personalised insurance contracts based on policyholders' actual behaviour is exciting.

Arm Holdings

Connected devices need processing power but don't have room for bulky hardware. Arm Holdings' super-fast, super-light processors, for which the company is renowned the world over, therefore represent the ideal solution in many cases.

AT&T

The US communications giant is investing heavily in the internet of things, concentrating on building platforms that will make life simple for customers, rather than requiring them to install endless applications on their smartphones to control each different device.

Its Digital Life offering features open standards so that its customers can integrate products from other companies as well as AT&T.

CSR

The British company's expertise in bluetooth and wireless connectivity leaves it ideally placed to play a major role in the internet of things. CSR's current focuses include applications in areas such as in-car entertainment and location technology.

Polar Capital Technology Trust

Highly regarded technology specialist Polar Capital Technology Trust, managed by Ben Rogoff, has a consistent record of outperformance and has emphasised the internet of things as a key theme for its portfolio over the past 12 months.

Axa Framlington Global Technology

Jeremy Gleeson, manager of the Axa Framlington Global Technology fund is a long-time advocate of the internet of things. He also runs the top-performing open-ended technology fund over the past seven years.

This article is for information and discussion purposes only and does not form a recommendation to invest or otherwise. The value of an investment may fall. The investments referred to in this article may not be suitable for all investors, and if in doubt, an investor should seek advice from a qualified investment adviser.