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Tech on the turn

Microsoft’s huge bid for Yahoo is probably a sign that technology shares are likely to start rising again. By historical standards, tech stocks are trading near a 10-year low.

There have been recent good results from companies such as Accenture and Oracle and corporate spending is holding up well, despite the expected recession in the US.

In Taiwan, in particular, tech stocks have been heavily discounting the prospects of a consumerled recession and as a result there are very attractive opportunities in some Asian stocks.

American tech stocks have underperformed the S&P 500 index. These are already pricing in some element of recession in the US. The weaker dollar is helping because around two-thirds of tech company revenue comes from outside the US.

The three tech funds I like best are Henderson global technology, M&G global technology and New Star technology.

All these funds are positive about the prospects for the tech sector in the medium term.

The Henderson fund invests around 70 per cent in the US and concentrates on the software, computer and semi-conductor sectors which account for around two-thirds of the fund.

The New Star and M&G trusts are much more widely spread, both sector-wise and geographically.

The Henderson fund has a very big holding of around 7.5 per cent in Microsoft compared with about 3 per cent in the New Star fund and a negligible amount in the M&G fund. New Star holds reasonably big holdings in Apple and Amazon.

Tech funds are still high risk but I believe that all bigger portfolios should have an exposure to them.

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