Why invest in technology?
In a very short period of time, technology has changed the world we live in. From a vast array of new, start-up companies to well-established technology giants, the sector is changing everyone’s lives. At the same time, both the companies and the producers of technology have become extremely profitable.
Investing in the technology sector has become increasingly popular in recent years as technology continues to drive innovation and shape the global economy. The technology sector is vast and includes a huge number of industries, including software, hardware, semiconductors, industrial electronic equipment, telecommunications, and the Internet of Things (IoT). Investing in this sector can offer investors high returns and the opportunity to be at the forefront of technological advancements, though there are inherent risks associated with investing in the sector.
One of the main advantages of investing in the technology sector is the potential for high growth. The technology industry is known for its fast-paced innovation and rapid growth, making it an attractive option for investors looking for high returns. For example, companies such as Amazon, Microsoft, Alphabet and Apple have seen tremendous growth over the past few decades, becoming some of the largest and most valuable companies in the world.
Are there any disadvantages of investing in technology?
It is important to keep in mind that investing in the technology sector is not without risk. The sector is highly competitive and companies that fail to keep up with the latest advancements can quickly become obsolete. Additionally, the technology industry is known for its fast pace of change and frequent disruptions, which can result in rapid changes in the market and company valuations. The ‘Dot-com bubble’ of the late 1990s was a clear indication of the huge growth potential that technology companies possess, while subsequently also showing how volatile they can be following the dotcom crash near the turn of the 2000s.
How can you invest in technology?
One way to mitigate these risks is by conducting thorough research and due diligence before making any investment decisions. This can help to identify companies with strong leadership, innovative products, and a solid financial foundation. Additionally, investors may want to consider investing in technology ETFs or mutual funds (please see our article on what an equity fund is here), which provide exposure to a diversified portfolio of technology companies, reducing the risk associated with investing in a single company.
Another factor to consider when investing in the technology sector is the role of government regulations. The technology industry is heavily regulated, with governments around the world implementing laws to protect consumer privacy, ensure data security/privacy, and prevent monopolies from occurring. These regulations can have a significant impact on technology companies, so it is important for investors to stay informed about any potential changes and how they may affect their investments.
Investing in the technology sector offers a huge investment opportunity for investors, but as with any investment, comes with risks. It is important to carefully research potential investments, stay informed about market trends, and consider the role of government regulations.
Types of technology funds
Liontrust offers a large range of equity funds, providing a variety of solutions to meet investors’ objectives.
The Liontrust Global Technology Fund provides investors with the ability to invest in an actively managed fund which invests at least 80% of the portfolio in shares of technology and telecommunications companies across the world.
KEY RISKS
Past performance is not a guide to future performance. The value of an investment and the income generated from it can fall as well as rise and is not guaranteed. You may get back less than you originally invested.
The issue of units/shares in Liontrust Funds may be subject to an initial charge, which will have an impact on the realisable value of the investment, particularly in the short term. Investments should always be considered as long term.
Investment in funds managed by the Global Fundamental Team may involve investment in smaller companies. These stocks may be less liquid and the price swings greater than those in, for example, larger companies. Some of the funds may hold a concentrated portfolio of stocks, meaning that if the price of one of these stocks should move significantly, this may have a notable effect on the value of that portfolio. Investment in the funds may involve foreign currencies and may be subject to fluctuations in value due to movements in exchange rates. Some of the funds may invest in emerging markets/soft currencies and in financial derivative instruments, both of which may have the effect of increasing volatility.
DISCLAIMER
This is a marketing communication. Before making an investment, you should read the relevant Prospectus and the Key Investor Information Document (KIID), which provide full product details including investment charges and risks. These documents can be obtained, free of charge, from www.liontrust.co.uk or direct from Liontrust. Always research your own investments. If you are not a professional investor please consult a regulated financial adviser regarding the suitability of such an investment for you and your personal circumstances.
This should not be construed as advice for investment in any product or security mentioned, an offer to buy or sell units/shares of Funds mentioned, or a solicitation to purchase securities in any company or investment product. Examples of stocks are provided for general information only to demonstrate our investment philosophy. The investment being promoted is for units in a fund, not directly in the underlying assets. It contains information and analysis that is believed to be accurate at the time of publication, but is subject to change without notice. Whilst care has been taken in compiling the content of this document, no representation or warranty, express or implied, is made by Liontrust as to its accuracy or completeness, including for external sources (which may have been used) which have not been verified. It should not be copied, forwarded, reproduced, divulged or otherwise distributed in any form whether by way of fax, email, oral or otherwise, in whole or in part without the express and prior written consent of Liontrust.
