Investing in technology is not without its risks, as anyone who lived
through the tech bubble can attest. In the 1999-2000 period, investors bid
tech names up to unprecedented heights, only to see them come crashing down
to earth. In fact, many tech-focused funds have not yet made up those
losses, even after their recent strong gains.
The Fidelity Technology Innovators Fund has been one of the more attractive
technology funds, particularly in the past three years. Manager
HyunHo Sohn took over the management duties in early 2013, and looks for long-term
structural winners that are trading at attractive valuations. Still, make
no mistake about it, this is a growth fund. It trades at valuation levels
that are high compared with the broader market, but are on the lower end,
relative to other tech-focused funds.
The portfolio is reasonably diversified, consisting of approximately 65
technology companies. It has a global mandate, and at the end of January,
had about 62% invested in the U.S., 10% in Japan, with the rest spread
across Asia and Europe.
The fund holds a lot of household names. As of Oct. 31, top holdings
Alphabet Inc. (NASDAQ: GOOGL),
Intel Corp. (NASDAQ: INTC),
Apple Corp. (NASDAQ: AAPL),
SAP SE (FRA: SAP),
Taiwan Semiconductor Manufacturing Co Ltd. (TPE: 2330). About a 26% of the fund is invested in software, 21% in chipmakers, 21%
in Internet software, with the balance in hardware and equipment makers.
For the three years ending Oct. 31, the fund delivered an average annual
compounded rate of return of 26.5%, trailing only the
TD Science & Technology Fund in the category. However, at a 3-year average standard deviation of 15.9%,
volatility has been lower than the 17.2% of the TD offering, resulting in
better risk-adjusted returns.
For those looking to add some tech exposure to their funds, this is one to
Fidelity Technology Innovators Fund
Fidelity Investments Canada
All Cap Growth
HyunHo Sohn since March 2013
2.38% (front end units)
FID297 (front-end load)
Dave Paterson, CFA, is the Director of Research, Investment Funds for
D.A. Paterson & Associates Inc., a consulting firm specializing in providing research and due
diligence on a variety of investment products. He is also the publisher
Dave Paterson’s Top Funds Report,
offering regular commentary and in-depth analysis of Canada’s top
investment funds. He uses a unique analytical approach to identify
funds with strong, risk-adjusted returns, and regularly publishes his
insights and analyses in Fund Library.
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