Technology-focused funds and investment trusts were among the best performers in 2023, a trend that is predicted to continue this year.
There is plenty of excitement about the difference that artificial intelligence (AI) could make to industries such as the services and retail sector, while major brands such as Alphabet, Amazon and Microsoft have big plans in this area.
The sector boomed last year, helped by the rising development and popularity of AI, and many investors will be seeking the best way to invest in technology.
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“2023 was a positive year for global equity markets, driven in large part by excitement over the potential for artificial intelligence to drive another leg in the tech boom,” says Laith Khalaf, head of investment analysis at AJ Bell.
“Concerns over the valuations of the US stock market and in particular a small cabal of big tech companies are gradually being rendered moot or seemingly foolish by continued strong performance.
“They say if you can’t beat them join them, and there must be plenty of value investors out there who would quite happily change their spots if they could do so without losing face.”
Here are some of the top technology and AI investments to lookout for this year.
Top technology funds
The majority of the top performing funds last year had a technology focus.
This included the Nikko AM ARK Disruptive Innovation fund, which returned 59.1% during 2023, according to Quilter Cheviot and Morningstar analysis of Investment Association data.
The second-best performer was Liontrust Global Technology, followed by T. Rowe Price Global Technology Equity.
“Technology stocks are very much back in vogue, despite the high interest rates that were supposedly going to hamper them,” says Nick Wood, head of fund research at Quilter Cheviot.
“The ‘magnificent seven’ stocks have brought tech funds back to the fore, with the top 10 performers being almost exclusively focused on that sector.”
Wood said it is fitting that the top spot goes to a fund managed by Cathy Wood, founder of ARK, a firm synonymous with tech investing in the US as Scottish Mortgage is in the UK.
“Clearly the artificial intelligence boom of 2023 has helped to drive these funds up from the doldrums they found themselves in at the beginning of last year and will have rewarded investors who stayed patient and invested through the difficult period,” he added.
“It has been such a dominance from the tech sector that other markets that performed well have not really got much of a look in, with only one non-technology dominated fund, the Lazard Japanese Strategic Equity fund, cracking the top 20 best performers last year.”
| Header Cell - Column 0 | 2023 total return (%) in GBP |
|---|---|
| Nikko AM ARK Disruptive Innovation | 59.1% |
| Liontrust Global Technology | 58.8% |
| T. Rowe Price Global Technology Equity | 54.4% |
| L&G Global Technology Index | 53.3% |
| New Capital US Growth | 49.8% |
| Pictet Robotics | 46.3% |
| Polar Capital Global Techology | 46.1% |
| Pictet Digital | 45.7% |
| JSS Sustainable Equity Tech Disruptors | 45.5% |
| PGIM Jennison US Growth | 45.5% |
Top technology investment trusts
The discounts on investment trusts hit record levels last year but it was a good period for more alternative and esoteric-focused portfolios, including in the technology sphere.
For example, Polar Capital Technology was one of the top investment trust performers last year, posting a total return of 50.5%, while Allianz Technology returned 44.5%.
The best performing investment company was private equity backer 3i Group, which returned 85.5% in 2023.
| Header Cell - Column 0 | Price total return 2023 (%) |
|---|---|
| 3i Group | 85.5% |
| Manchester & London | 70.4% |
| Polar Capital Technology | 50.5% |
| Doric Nimrod Air Two | 48.2% |
| Fondul Proprietatea GDR | 47.3% |
| Allianz Technology | 44.5% |
| Nippon Active Value | 41.1% |
| Georgia Capital | 40% |
| India Capital Growth | 34.1% |
| Amedeo Air Four Plus | 30.4% |
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