Interest in Apple boosts Eagle Star yields

FUND FOCUS: TECHNOLOGY: Best performer YTD:Eagle Star TopTech 100 +11.9%

Worst performer YTD:

AAM Global Technology +2.8%

A HIGHLY volatile sector, technology stocks are nonetheless proving to be a good bet, with technology funds one of the few to put a smile on investors’ faces.

According to Moneymate, so far in 2010 Irish gross domestic funds invested in technology stocks have performed particularly well, returning 8.4 per cent on average in the period to August 6th, or 23.7 per cent over the 12 months to 2010.

The top ranking fund in this time period is Eagle Star’s TopTech 100 fund, which is up by almost 12 per cent in the year to date, and has returned almost 30 per cent over the past year.

An index fund, it tracks the shares of the Nasdaq-100, which covers nine major industry groupings, with technology making up a majority of the index. Some 63 per cent of the fund is invested in information technology stocks, with healthcare the next largest weighting, at 15 per cent.

Driving the performance of the fund has been its investment in Apple, which accounts for 20 per cent of total investment. Other big allocations include Microsoft, Google and Qualcomm.

Stephen Docherty, head of global equities at Aberdeen Asset Management, manager of the Phoenix SCP AAM Technology fund, which is up by 9.4 per cent in the year to date, puts the positive performance of technology stocks this year down to strong demand for their products.

“Technology companies have generally given upbeat earnings forecasts, in particular global demand for mobile applications is set to grow significantly with the total value of the market expected to exceed US$17 billion by 2012,” he notes.

He expects technology stocks to maintain their upward momentum aided by low interest rates and abundant liquidity, but he adds that, “the continued rise in global equity markets makes us increasingly cautious about valuations”.

While all technology funds covered by MoneyMate are in the black so far this year, the AAM Global Technology fund is nonetheless underperforming, returning just 2.8 per cent, far below the average return achieved in this category. However, over a 12-month period, it is up by 18 per cent. Unlike other technology funds, which also allocate in the minority to other sectors, this fund focuses only on high-tech industries.