Merrill Lynch Investment Managers is connecting up to the world of telecommunications with the introduction of the world telecoms fund.
World telecoms is a Luxemburg based Sicav brought in for experienced investors looking to add a high risk fund to their portfolio.
Eighty per cent of the fund will invest in telecommunications operators such as British Telecom, AT&T, Nokia and Motorola. The rest of the fund will invest in companies that provide telecom software as well as those which repair and maintain telecom products such as phones and phone lines.
The fund will invest predominantly in the US and Europe, with some exposure to Asia and other areas such as the Middle East and Latin America.
It will be managed from London by Vicky Hastings. Hastings joined Merrill Lynch Investment Managers in 1994, and has managed the Merrill Lynch European investment trust since then. She has also worked for Merrill Lynch as a researcher in telecommunications stocks.
Merrill Lynch believes that the market is poised for long term growth. This is despite the fall in telecom shares over the past year due to the auction of third generation mobile phone licences. These are licences to provide mobile phones that use broadband wavelengths to enable them to download video images. These products are still being developed and it is uncertain how popular they will be. The auction of the licences left many telecoms companies with debt burdens in a market that does not exist at the moment.
Recent months have also seen a slowing in sales of second generation mobile phones as well. As a result companies such as Ericsson have been forced to bring in large-scale redundancies as a part of a series of cost-cutting measures. On April 20, 2001 Ericsson announced that it was making 12,000 people redundant worldwide.
According to Standard & Poor's the Merrill Lynch European investment trust is ranked 9 out of 11 funds, based on £1,000 invested on a mid to mid basis with gross income reinvested over three years to April 23, 2001.