Will history repeat itself following the demise of Aberdeen technology, Britain’s most popular technology fund?
Aberdeen technology is to change its name following the decision to alter its remit. From May 10, it will embrace innovation rather than sticking to technology securities.
It is a stunning fall from grace for a fund that attracted around a quarter of a million investors at the height of the tech boom. It was easy to see why it proved so popular in the first place – and why it has since had to rethink its strategy.
A fore-sighted investor who had put £1,000 in the fund at launch in 1982 (admittedly, there would not have been many) would have been sitting on £36,000 by mid-1999. No wonder few investors could resist such mouth-watering figures. The fund was raking in more money in a week during the 2000 Isa season than it had done in 20 years.
Unfortunately for Aberdeen, the global tech fallout meant it had more disgruntled investors than any other fund manager. The majority of investors have not made a penny. Since the beginning of the millennium the fund has fallen 38 per cent.
Prior to 1999, there were just three technology funds. By March 2000, there were more than 28. The bursting of the bubble has caused some funds to close or merge, including Jupiter global technology and Scottish Equitable technology, and today there are just eight dedicated technology offerings now the original Aberdeen fund has changed its remit.
However, many people tend to forget that the 1990s’ boom was not the first time the fund management industry caught the technology bug.
Tech funds first came on the scene in the early 1980s, when companies like Amstrad and IBM started to make waves in the emerging computer world and when the closest thing to a Sony PlayStation was Sinclair’s ZX Spectrum.
If you go through the archives of the old Association of Unit Trusts and Investment Funds, better known today as the IMA, you will discover there were up to 20 technology unit trusts in 1985. Those old enough to remember might recall the Allied Dunbar Technology and Save & Prosper New Technology funds, both which disappeared in the early 1990s.
Those providers who have made an exit recently might have similar regrets to those that bailed before the 1990s boom, should the technology story take hold again.
There will be many investors who regret not investing in the likes of Apple and Google – two companies that have defined the way many of us live our lives today. As I write this on my MacBook while listening to my iPod, it seems ridiculous we ever doubted that technology would take hold.
Tech fund managers admit they acted rashly during the boom and failed to realise that many of the tech stories take years to come good. They were only too happy to invest in so-called blue-skythinking companies.
Ben Rogoff, who enthusiastically sold the Aberdeen fund’s wares at the height of the sector’s fortunes, admits the 3G story, like online advertising, is “only just happening”. Now at Polar Capital, Rogoff is one of many fund managers claiming tech firms today have proven track records and are on cheaper valuations, having “grown up”.
Technology funds have started to appear on the radar of multi-managers and one or two advisers are warming to the story again. The trouble is that choice is dwindling fast but the remaining funds might want to hang on in there. Their time might just come again.
Paul Farrow is personal finance editor at the Telegraph Media Group