Fund of the week: A unique insight into mobile tech stocks
This successful California-based tech fund profits from being close to the action.
Over the past three years, one of the top-performing technology funds has been the RCM Technology Trust fund (LSE: RTT). It has beaten its benchmark, growing by 62.7% over the past three years, compared with 53.6% for the sector average. It has also beaten the Dow Jones World Technology Index.
The fund is managed by Allianz Global Investors, with experienced manager Walter Price running it from his San Francisco office. This proximity to Silicon Valley enables Price to meet with firms around three times a week, allowing him to gain a "unique insight" into the industry.
His preference is for technology stocks with fast-growing revenues. But while he will tolerate high price/earnings ratios, he insists that a firm must at least be close to turning a profit.After creating a shortlist of around 100 shares, he works with his analysts to find those that offer the most potential.
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Instead of companies selling expensive software, they are reinventing themselves as service providers, renting out cloud-based' software on a monthly basis. While this will ultimately bring in more money, it will make short-term cash flow more volatile.
In line with these views, about 20% of the fund is in shares directly related to the mobile internet, such as search engine giant Google, internet radio station Pandora and mobile network specialist Aruba. Cloud computing firms, like Amazon, account for another 20%. He also invests in firms that aim to solve a specific problem, such as electric car firm Tesla.
Google Inc | 5.5 |
Facebook Inc | 4.9 |
Tesla Motors Inc | 4.5 |
Sunpower Group Ltd | 3.4 |
Amazon Com Inc | 2.9 |
Aruba Networks Inc | 2.8 |
Micron Technology Inc | 2.8 |
Western Digital Corp | 2.6 |
Pandora Media Inc | 2.5 |
Alcatel Lucent | 2.1 |
Sign up to Money Morning
Our team, led by award winning editors, is dedicated to delivering you the top news, analysis, and guides to help you manage your money, grow your investments and build wealth.
-
How to invest in nuclear power
We need nuclear power to go green, says Dominic Frisby. But there is a better option than huge power stations
By Dominic Frisby Published
-
Chase slashes its easy-access savings rate – is it time to switch?
The Chase easy-access savings account has proved popular with savers thanks to its competitive rate and bonus deals. But, as the rate has dropped, has it lost its charm?
By Katie Williams Published