Technology stocks are very much on Questor’s mind at the moment because we are on the hunt for shares that have the potential to rise dramatically over the next three months for our £20,000 Fantasy Fund Manager game – and the right tech stocks would fit the bill perfectly in this column’s view.
This is because technology has come so much to the fore during the coronavirus pandemic as remote working and online shopping cease to be optional and become essential to very many homes and businesses.
There is a problem as far as our competition is concerned, however: it allows only London-listed companies to be held – only FTSE 350 companies at that – and tech stocks are overwhelmingly found overseas, particularly in America.
Britain has a handful – Ocado, Just Eat and Avast, the antivirus firm, spring to mind – but while those three would qualify for the game, others are ineligible either because they are quoted on the junior Aim market, and therefore cannot be in the FTSE 350, or are too small to be members of that index.
All is not lost, however. Investment trusts provide the answer. Several technology-focused trusts are members of the FTSE 350 and therefore eligible for inclusion in your Fantasy Fund Manager portfolio.
Let’s look at the most prominent.
Scottish Mortgage is not only a member of the FTSE 100, and therefore automatically a member of the FTSE 350, which consists of the blue-chip index and the FTSE 250, but it is London’s biggest investment trust by a very long way. Much of its success can be put down to its holdings in tech stocks that have turned out to be extremely well chosen. Prominent among them are Amazon and Tesla, both of which are riding high at the moment.
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Scottish Mortgage and the fund management firm that runs it, Baillie Gifford, have a strong commitment to finding the small number of stocks anywhere in the world that have the potential to grow very strongly and also sustainably. James Anderson and Tom Slater, the trust’s managers, devote huge effort to identifying such companies and when they have found them they are prepared to stick with them for very long periods.
Questor says: buy
Share price at close: 899.5p
Another popular and successful technology trust is Polar Capital Technology. When we tipped it in November 2018 we said the management team, led by Ben Rogoff, who had specialised in technology for 22 years and joined Polar Capital in 2003, had a “strong record of stock-picking” that had resulted in substantial outperformance of the tech sector as a whole.
Questor says: buy
Share price at close: £21.20
Allianz Technology is not a trust we have covered here so far but Questor has expressed its admiration for it in another way: by tipping several individual stocks held in this portfolio on the strength of conversations with its manager, Walter Price.
Several of those tips have performed extraordinarily well: CrowdStrike, a cybersecurity company, has gained 88.7pc, Zscaler, a “cloud computing” firm, 80.4pc and Twilio, which sells communications software, 222pc.
Mr Price is another veteran watcher of the rise of Silicon Valley and is himself based in California. Questor can personally attest to his energy and commitment, even though he is now in his fifth decade in fund management.
Questor says: buy
Share price at close: £23.50
We will now add these three trusts to Questor’s Fantasy Fund Portfolio, where they will replace our three remaining randomly chosen stocks. That maintains the minimum requirement of five holdings and we could leave things at that for the duration of the contest.
If, on the other hand, we find some other promising FTSE 350 members in the coming weeks, we can always add them too, as contestants are allowed up to 20 holdings. Sign up for the competition and build your portfolio here. The interface is very intuitive and the process takes just minutes.
Read the latest Questor column on telegraph.co.uk every Sunday, Tuesday, Wednesday, Thursday and Friday from 6am