Tech funds see recovery from global sell-off
While equity markets have crashed thanks to the ongoing COVID-19 pandemic, technology funds have managed to see inflows and have already started to recover losses since the global sell-off, according to data.
Bank of America’s latest research found tech funds continued to see inflows (annualising US$58 billion ($94.4 billion) year to date) throughout the recent equity crash.
Over the last four weeks, it also placed sixth in largest exchange traded fund flows for the bank’s private clients at US$0.2 billion.
Bank of America said it was “fascinating to note inflows to tech funds every week thus far in 2020”.
Looking at Australian-based technology funds, FE Analytics found that while tech funds could not avoid the global selloff that started mid-February 2020 they started to recover from 16 March, 2020. Since 16 March, all fund have returned between 9.2% and 22.4%.
Since the COVID-19 pandemic’s infancy at the beginning of the year, BT Technology Retail fund was the best performing at 6%. This was followed by Perpetual Global Innovation Share A (4.2%), Fiducian Technology (3.74%), BetaShares Asia Technology ETF (3.5%), and BetaShares Global Cyber Security ETF (2.86%).
Technology fund performance since 1 January 2020
Source: FE Analytics
The Perpetual fund’s latest factsheet dated 29 February, 2020 said its overweight position in communications platform provider, Zoom Video Communications (up 42.9%) contributed to its relative performance.
Zoom has been in high demand since the COVID-19 pandemic has forced workers into working from home and using video conferencing platforms.
“Improved investor sentiment driven by stronger demand for video conferencing usage on the back of heightened quarantine measures and work-from-home initiatives implemented by corporations led to a rally in Zoom’s share price over the month as coronavirus infections rates continued to rise in the US and across the globe,” the factsheet said.
It noted the extent to which the virus would impact global economic activity had yet to be realised but would be significant over the coming months.
“The flow-on effect for corporations may lead to further earning-downgrades which will present additional challenges for markets over the near term. These headwinds and potential risks have been very well telegraphed by the investment community and the media.
“The timing and severity of any potential economic downturn, if there is in fact one, is difficult to predict. We continue to find opportunities in quality companies with robust balance sheets, strong management and industry positions that trade at reasonable market multiples.”
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