View more on these topics

Credit Suisse is confident TMT can be reignited

Federal Reserve chairman Alan Greenspan&#39s much anticipated interest rate cut in the US early this month did little to stimulate markets and the Bank of England&#39s subsequ ent decision not to reduce rates came as a blow.

Investors would be right to feel less enthusiastic than last year. Annual unit trust returns averaged 25 per cent a year ago but performance has fallen to a current annual negative average of -6 per cent.

The 60 per cent return in the last 12 months from the top-performing unit trust, Framlington health, compares poorly with the 350 per cent achieved by the previous year&#39s chart-topper, Invesco Japan ese smaller companies.

With 40 per cent of fund sales generated during the Pep or Isa season, the investment industry is busy working out its strategy to combat the current mood. But while a few fund managers are taking the nervous mood of inv estors as a time to push their more conservative funds, a few have decided to buck the trend.

Last week, Credit Suisse Asset Man agement announ ced a new technology, media and telecoms fund at a time when TMT is at the very back of most investors&#39 minds. After del aying the launch for several months, CSAM belie ves TMT is looking good value again. It stresses it is not calling the bottom of the market but bel ieves we are a long way off the top.

Managing director Ian Chimes says: “Sometimes, the best time to buy a market is when sentiment is flat. What we have seen with TMT is a value play on a growth market. There has been a serious correction based on expectations getting ahead of themsel ves, Many of the com panies are still as valuable as they were a year ago but half the price.”

Chimes points out that stocks such as Vodafone, Sam sung, Cisco and Micro soft are all around 50 per cent off their highs last March but are still very strong companies.

Perhaps the strongest end orsement of the sector&#39s pot en tial is equity income manager Bill Mott&#39s decision to begin buying TMT stocks for his funds. Having stayed clear when TMT was at its most pop ular, Mott is once again bucking the trend and rem ains confident about markets in general for the first quarter of 2001.

He says: “Despite some volatility in the next few weeks, the pull of lower interest rates will be the dominant force and markets will perform well in the first few months of this year in expectation of a soft landing and continued growth. Con se quently, some of the areas of the market which have shown meagre returns in recent months may begin to recover.

“In recent weeks, we have started to seek selected opportunities in technology and the income funds are now overweight in the media sector while cutting back exposure to defensive areas of the market such as utilities and food retailers. The market is changing and so is our portfolio.”

IFAs&#39 response to CSAM&#39s move remains mixed. While many see it as a brave step, not so many are willing to hurry cli ent money into the fund.

Michael Philips partner Michael Both feels CSAM will face a challenge in convincing the market that now is the time to get back into TMT.

He says: “Telecoms are certainly at their lowest for a couple of years but whether that means this is the right time to launch a fund is a different matter. I would be happy to give it the benefit of the doubt in terms of success but it may struggle getting this fund away. For braver clients, we would consider recommending it.”

CSAM&#39s fund is sure to take a reasonable amount of money over the coming Isa season. While investors have a tend ency to jump on any passing bandwagon during the Isa season, there are many who opt to do the opposite to everyone else.

There is a compelling logic to CSAM&#39s argument for getting back into TMT and it seems certain that those dipping into the sector this Feb ruary will fare much better than those who jumped in this time last year. As yet, however, Mott is one of the few to express strong optimism.

Both says: “I think the market being what it is, there is room for good stock-picking but there is no easy money to be made at the moment.” 


B2C or B2B?

Last year was generally bad for dotcom businesses. It seemed that a month did not go by without reports of a dotcom business struggling to secure ongoing funding, calling in administrators or ceasing to trade. Typical dotcom business models rely on a business-to-consumer (B2C) proposition where the costs of middlemen – wholesalers, premises, people, etc […]

Clerical Medical offers first taste of stockmarket

Clerical Medical is expanding its range of unit-linked bonds with another version of its investment bond. The investment bond is designed to give clients in the 40-50 age group their first taste of stockmarket investing. These clients may have become accustomed to building society accounts but feel that they ready to ease their way in […]

Earning curve

I am a director of a recently established family business. Although I am in my early 50s, I have not made any provision for my retirement. I only draw a minimal salary from the company, preferring instead to draw dividends. This is not a strategy I wish to change, principally because of the National Insurance […]


On New Year&#39s Day, I walked along the shore road out of Kovilam Kovalam to the small fishing village of Vizjhinjam in Southern India where there had been, according to The Hindu Times, “some difficulties between the youths of the various religions in the area”. Apparently, they do not share a common view of the […]


News and expert analysis straight to your inbox

Sign up


    Leave a comment


    Why register with Money Marketing ?

    Providing trusted insight for professional advisers.  Since 1985 Money Marketing has helped promote and analyse the financial adviser community in the UK and continues to be the trusted industry brand for independent insight and advice.

    News & analysis delivered directly to your inbox
    Register today to receive our range of news alerts including daily and weekly briefings

    Money Marketing Events
    Be the first to hear about our industry leading conferences, awards, roundtables and more.

    Research and insight
    Take part in and see the results of Money Marketing's flagship investigations into industry trends.

    Have your say
    Only registered users can post comments. As the voice of the adviser community, our content generates robust debate. Sign up today and make your voice heard.

    Register now

    Having problems?

    Contact us on +44 (0)20 7292 3712

    Lines are open Monday to Friday 9:00am -5.00pm