INVESCO GT Rupert Children's fund is limiting its technology exposure by investing through venture c...
INVESCO GT Rupert Children's fund is limiting its technology exposure by investing through venture capital funds such as 3i.
David McGillveray, fund manager, said he was cautious in exposing the fund to pure technology companies but does maintain an overweight position to tech, media and telecoms stocks via 3i and to the media and telecoms sectors directly.
This approach to investing in the fund, which has a 5.25% initial fee, reflects McGillveray's investment philosophy of seeking out long-term growth trends, but protecting his unit holders from pure technology plays. The annual management fee levied on the £73.1m fund is 1.5%, IFA commission is up to 3% and renewal is 0.5%. The minimum investment is an initial £50 lump sum, or monthly investments of £20 or more.
The fund, which is designed to have at least 70% in FTSE 100 stocks, has returned 49.3% on a bid to offer basis over the three years to 26 April, and negative returns of 1.7% over the past 12 months. In the three months to 26 April it has had bid to bid returns of 0.3%.
McGillveray says: "I am very wary of pure technology plays such as AMM or Baltimore, because the valuations are very high. The nature of the technology means the long-term case for their business models is not clear. You are buying the clear blue sky of tomorrow, not the evidence of today.
"With this fund you are investing for children over the long term, so it is important to avoid market fads. 3i is the UK market leader in venture capital. They are putting an increasing amount into new technology."
The growth sectors McGillveray is keen on include media, particularly in the area of TV and internet content provision, and telecommunications. His long-term plays include Energis and Kingston Communications in the telecommunications sector, and Pearson, Carlton, United News, and EMAP in the media sector.
However, McGillveray also invests in selected older economy stocks where he feels there is a long-term growth dynamic, which has not been priced in by the market. Examples include British Aerospace, which is set to benefit from a growing global market in military outsourcing, and Imperial Tobacco, which is increasing its international earnings rapidly.
Another growth story McGillveray has identified is the rise of alternative investment companies reflected in a holding in ED&F Mann. McGillveray is also not adverse to taking shorter-term advantage where he sees it, and has holdings in BP Amoco and Shell based on value exposed before oil prices took an upturn.
The fund is generally kept clear of sectors in which there is structural long-term pressure on margins such as retail and banking. That is reflected in an underweight holding in this sector compared to the benchmark.