Nick Train sees the technology sector as being at the start of a long bull market, claiming the crash in the early 2000s was a mere prelude to future successes.
Train says the 30 per cent weighting to tech and media in the Finsbury Growth & Income investment trust is “critical” to the fund’s strategy and the area that he expects to display the best returns in the near term.
He says: “To us it is absolutely self-evident, beyond any shadow of doubt, that from a global perspective we are only in the very, very early stages of a major likely multi-decade bull market in technology,”
“A bull market that, within a decade, we would expect to radically transform the constituents of markets and types of companies that make up those markets around the world.”
Train owns eight companies in the technology and media sector, out of a total of 24 holdings in the trust. These include names such as publisher Pearson and business management software firm Sage, although the manager says the UK has limited opportunities for pure tech plays.
While conceding that it is impossible to prove his prediction and cognisant of the tech crash, the manager maintains that his outlook is “not just a delusional fantasy” and points out the recent returns in the markets.
Despite ongoing concern over Greece, the S&P 500 has delivered annualised returns of about 6% in the year to date. In the Nasdaq index, which is home to US tech firms, the annualised rate of return stands at almost 20 per cent while that for tech giant Apple is about 80%.
“Arguably, the next major bull market is happening right now,” he adds.
Train claims the sector can be compared to the early days of the railroad. In the 1840s, the emerging railroad industry suffered a “massive crash” that caused investors to lose up to 90 per cent of their capital.
But he notes that over the next couple of decades, the economic benefits of the railroad became apparent and by 1900 over half of all quoted companies in London were railroads or firms servicing them.
“I think there’s a very useful analogy between this and the crash between 2000 and 2003 in digital-related companies and the subsequent growth that everyone can see is impinging on their everyday lives,” says Train.