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Bates urges switch to Global focus from tech

Bates Investment Services is urging investors in higher-risk sectors to switch from technology funds to global focus funds to escape the volatility it believes plagues the TMT sector.

In a move which could sound the death knell for some smaller funds, the firm is recommending clients to ditch funds in the tech, media and telecoms sector as their performance is unlikely to justify the risks they continue to pose.

Head of investments James Dalby says investors in the medium to high-risk categories should instead move into global focus funds – concentrated portfolios free of benchmark and sector constraints – to chase higher returns with half the volatility.

He says focus funds offer a broader base of investments and do not oblige managers to buy certain stocks, allowing them to invest solely in their best bets. This not only dampens volatility, says Dalby, but also allows investors to benefit from any technology rally as most focus funds hold tech stocks.

Bates&#39s move could come as a boost to Fidelity&#39s global focus fund, which attracted less than £2m in the first few weeks of its launch in mid-January. But it may not be good news for New Star Asset Management, which recently bought the biggest tech fund in the sector – Aberdeen Asset Manage-ment&#39s £400m tech fund – as part of a six-fund deal with AAM.

Dalby says: “We will be telling clients over the next few months to get out of tech. Medium to high-risk investors would be far better off with broader-based focus funds. I cannot see tech outperforming them. It is not worth the risk. ”

New Star tech fund manager John Pullar-Strecker says: “Technology will always be volatile but people do not appreciate how much that balance sheets have been rep-aired. We are pretty optimistic.”


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