Interactive Investor

The Baillie Gifford fund we have just bought

Saltydog analyst points out tech funds have been staging a comeback of late and has positioned to profit.

5th July 2021 13:56

Douglas Chadwick from ii contributor

Saltydog analyst points out tech funds have been staging a comeback of late and has positioned to profit. 

This content is provided by Saltydog Investor. It is a third-party supplier and not part of interactive investor. It is provided for information only and does not constitute a personal recommendation.

The Nasdaq Composite, an index of more than 3,000 stocks listed on New York’s Nasdaq stock exchange that includes the world’s leading technology and biotech companies, went up 5.5% in June. Last year, it rose more than 40% as companies in the technology sector took advantage of the global lockdown.

This year it has not performed as well, and in May it went down while other indices were still rising. However, last month it reversed the trend. Is the sector about to make a comeback?

Data source: Morningstar   Stock Market Indices 2021            
Index Country Jan 2021 Feb 2021 March 2021 April 2021 May 2021 June 2021 1st Jan to 30th June
FTSE 100 UK -0.8% 1.2% 3.6% 3.8% 0.8% 0.2% 8.9%
FTSE 250 UK -1.3% 3.4% 2.9% 4.5% 0.8% -1.4% 9.2%
Dow Jones Ind Ave US -2.0% 3.2% 6.6% 2.7% 1.9% -0.1% 12.7%
S&P 500 US -1.1% 2.6% 4.2% 5.2% 0.5% 2.2% 14.4%
NASDAQ US 1.4% 0.9% 0.4% 5.4% -1.5% 5.5% 12.5%
DAX Germany -2.1% 2.6% 8.9% 0.8% 1.9% 0.7% 13.2%
CAC40 France -2.7% 5.6% 6.4% 3.3% 2.8% 0.9% 17.2%
Nikkei 225 Japan 0.8% 4.7% 0.7% -1.3% 0.2% -0.2% 4.9%
Hang Seng Hong Kong 3.9% 2.5% -2.1% 1.2% 1.5% -1.1% 5.9%
Shanghai Composite China 0.3% 0.7% -1.9% 0.1% 4.9% -0.7% 3.4%
Sensex India -3.1% 6.1% 0.8% -1.5% 6.5% 1.0% 9.9%
Ibovespa Brazil -3.3% -4.4% 6.0% 1.9% 6.2% 0.5% 6.5%
RTSI Russia -1.4% 3.2% 4.6% 0.5% 7.6% 3.5% 19.2%

The resurgence of the technology stocks can also be seen in our latest Investment Association (IA) sector analysis. The best-performing sector in June was ‘Technology and Telecommunications’ with a one-month return of nearly 8.3%. A big improvement on the 3.6% loss that we saw in May.

The UK Smaller Companies sector, which was the leading sector in May and is still the best-performing sector so far this year, went down in June. It looks as though the tide may be turning.

Over the last few weeks, our demonstration portfolios have been reacting to this change in momentum.

We have reduced our holdings in the Franklin UK Smaller Companies and FP Octopus UK Micro Cap Growth funds. We have sold the Artemis UK Select, Premier Miton UK Smaller Companies and the Jupiter UK Smaller Companies Equity funds. A couple of weeks ago we invested in the L&G Global Technology Index and the AXA Framlington Global Technology fund and they are already showing gains.

Last week, we added the Baillie Gifford American fund. It is from the ‘North American’ sector, and not the ‘Technology and Telecommunications’ sector, but it does hold a lot of tech stocks and was the best-performing fund in our analysis with a four-week return of 14.4%.

This is another one of the funds that we held last year. We bought it in April and sold it in September. In that time, it went up by 59%.

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