Jeremy Gleeson is tilting Axa Framlington’s Global Techfund towards the mid- and small-cap arena where he is seeing a wider range of growth opportunities.
Companies are beginning to buy new IT equipment rather than spending their budgets on maintaining existing systems, which is driving growth in the sector, Gleeson says.
The fund has about 31% in mid caps and 32% in small caps, while the MSCI World IT index has 27% in mid caps and 73% in large caps.
Gleeson says large caps have “their best years behind them”, and has reflected this view by cutting some of his larger-cap positions.
Gleeson cut Oracle from 3.9% in late 2008 to 1.5% now, making it a 2.4% underweight against the MSCI World IT index. Other large-cap underweights include IBM, Hewlett-Packard and Nokia.
Gleeson is careful not to get stuck in mid- and small-cap positions, as trading volumes of IT firms have fallen since the crisis.
Between 14 billion and 16.4 billion US IT firms’ shares changed hands each quarter this year, versus 20bn to 26bn in 2008.
However, Gleeson says lower volumes can create pricing anomalies for long-term investors.
