As I mentioned two weeks ago, technology has really stolen the spotlight in the investment industry. It is tech mania! Everyone is talking the talk and many are walking the walk. Sector investing, primarily into technology, is really trendy. I spoke to C.I. Mutual Funds and according to IFIC, 50% of the deposits in the month of February went into sector type investments like technology, health science, telecommunications, etc. That's amazing! And disturbing!
If you have invested in this sector, you have received significant rewards. If you are new to the mania, you might have felt some of the recent volatility as the NASDAQ is off 12% from it's recent and all time high.
I had the opportunity to talk to three professionals about the tech industry:
- Duncan Stewart, manager of the Navigator Canadian Technology Fund, is a dynamic, passionate character who pounds the streets looking for good Canadian companies with competitive global characteristics. He is one of the few tech managers who employ a value orientation in Canada. In his words “I look for companies with good management, smart science and valuations below the industry average – GOOD, SMART, CHEAP”. Stewart oozes confidence for continued growth of technology when he says, “The industry may go through volatility but good research and smart stock picking can help weather the volatility. If the long term average of blue chip stocks is 10% and riskier investments can provide 12% to15%, then technology might grow by 20% to 25%.”
- Bill Keithler, manager of the AIM Global Technology Fund was in Edmonton speaking to Investment Professionals about investing in the tech market. Keithler, believes there is risk in the sector, “Any time you produce 275% returns, you must ask yourself if it will continue. While we believe in the long-term story of technology, we must be concerned about managing risk. We hold over 120 stocks in our portfolio and our TOP 10 holdings account for only 10% of the total. This diversification coupled with trying to pick the right segments of the market helps us to manage risk in a riskier sector.”
- Mick Murano, a stock broker at Scotia Securities in Edmonton, believes the best way to invest in technology is to do it through mutual funds, “There are so many companies and it is impossible to do the door knocking, technical analysis and follow-up to properly select tech stocks. You need to find a good fund manager who has the resources, time, and expertise to research the stocks properly.” Mick shared with me his two favorite tech funds: AIM Technology and C.I. Telecom.
The technology sector is in a period of Euphoria and I encourage investors to proceed with caution. Good research leads to good decisions so ensure you do your homework or find someone who can help you do the research.