FUND FOCUS: TECHNOLOGY:Best performer last five years:
Irish Life Telescope 2G +23.4%
Worst performer last five years:
Quinn Life Biotech Freeway Technology + 1.1%
ALTHOUGH TRADITIONALLY perceived as a relatively volatile investment option, mainly as a result of the dotcom collapse in 2000, technology funds have put in a solid performance over the last few years.
While the sector is still home to high-growth stocks which attract a higher risk profile, investing in technology-based funds – which can include investments in telecoms, blue-chip and high-tech companies – has paid off for investors.
Data from MoneyMate shows that Irish domestic funds invested in technology stocks returned an average of 10.5 per cent over the five years to November 19th, with all the funds delivering positive returns.
The top-ranking fund is Irish Life’s Telescope 2G, which delivered a 23.4 per cent increase. An index fund, it tracks the performance of the Dow Jones European Telecoms Index. The fund concentrates its investment in large European telecoms stocks, such as Vodafone, Telefonica, France Telecom, Deutsche Telekom and BT, all of which have performed well.
According to Neil Clifford of Irish Life, the outperformance of the fund is down to the fact that telecoms are generally regarded as defensive stocks. “While they may underperform in a bull market, as happened in the years directly preceding the latest financial crisis, they tend to outperform when investors become more risk-averse.”
As a result, the telecoms funds traced by Telescope have experienced a strong rally in the last six months in particular.
The most significant underperformer in the sector was Quinn Life’s Biotech Freeway Technology fund which has returned just 1.1 per cent growth over the five-year period.
A spokeswoman for Quinn Life said the company had no comment to make on its performance.
The company’s literature says the fund aims to provide exceptional long-term capital growth by tracking the performance of the major technology and telecommunications companies in the US, specifically, the Nasdaq 100 Index.
