For these reasons tech is unlikely to ever be as defensive as healthcare or utilities, but it is also no longer as cyclical as the likes of energy, industrials or financials. Even in a severe recession most mega-cap tech will continue to generate lots of cash.
I will finish with the best example someone brought to me about the defensive nature of tech: there are currently 1.5bn Apple iPhone users across the globe, if Apple decided to double the price of your device, would you get rid of it? I think the answer for the majority of us is no, which tells you the power big tech now has in any economic scenario.
Funds to consider
Sanlam Global Artificial Intelligence
This fund 'eats its own cooking' using an AI system to help find companies whose business models are aligned to benefit from this growing theme.
The fund is unconstrained in that it can invest in businesses of almost any size and in more than just technology stalwarts; around half of the portfolio can be found in the healthcare and consumer-related sectors.
Initial screens will then remove stocks under £250mn market capitalisation, which leaves an investable universe of around 500 stocks. These companies will not just be technology companies, they can be from any sector but must have a core element of their future growth based around the benefits of implementing AI.
AXA Framlington American Growth
This fund has a strong growth bias and aims to invest in companies exhibiting genuine organic growth. It is mainly invested in large-caps but does have some mid-caps as well.
About a third of the fund is currently invested in technology, with Apple, Microsoft, Alphabet and Amazon among its top five holdings.
Manager Stephen Kelly benefits from AXA’s strong resources in specialist areas such as technology, biotechnology and healthcare. This fund has done very well and has been helped by the extremely strong performance of US tech companies over the past few years.
The fund does have a heavy style bias to growth and investors should be aware that the fund may underperform when this is not in favour.
Guinness Global Innovators
As the name suggests this fund is all about finding and investing in innovative and disruptive businesses that are changing the world in which we live.
The team creates its investment universe by identifying nine innovation themes, these are: advanced healthcare; AI and big data; clean energy and sustainability; cloud computing; internet, media and entertainment; mobile technology and the internet of things; next generation consumer; payments and fintech; and robotics and automation.
The managers then pick the highest quality, fastest growing and best value stocks from within these themes. Over half the fund is currently held in technology.
