However, the 17-strong peer group is the best performing sector over one year (to 9 June) with a 48.03 per cent total return.
In comparison, the largest of the Investment Association sectors – IA UK All Companies – has risen by just 20.69 per cent over one year.
Performance of sectors over 1yr
Source: FE Analytics
The average tech fund has also delivered a 79.95 per cent return over three years: only the IA Japanese Smaller Companies sector has delivered a greater return over three years with 86.47 per cent.
However, like the IA Japanese Smaller Companies sector, IA Technology & Telecommunication is one of the more overlooked equity-focused sectors.
The specialist funds are unlikely to feature in many investors’ portfolios, with individuals gaining exposure to the sector through more diversified strategies.
For those unfamiliar with the sector, Investment Association criteria stipulate that funds must invest at least 80 per cent of their assets in technology and telecommunications sectors as defined by major index providers.
FE Analytics data shows that fund portfolio holdings are dominated by North American stocks, representing 66.88 per cent of sector holdings. Asia-Pacific equities are another major component of funds’ portfolios, with an aggregate weighting of 10.56 per cent.
Below, FE Trustnet highlights some of the sector’s strongest performers over several timeframes. As must always be remembered, past performance is not an indicator of future returns.
The best performer over one year is the three crown-rated Polar Capital Global Technology fund. Over one year it is up by 59.94 per cent and is the second best-performing fund over three years with a 120.48 per cent return.
Performance of fund vs sector over 1yr
Source: FE Analytics
The $1.5bn fund is managed by long-term managers Nick Evans and Ben Rogoff, who also oversee a trust bearing the same name.
Evans has been a manager of the open-ended fund since 2001, while Rogoff was appointed co-manager in 2007.
With an objective of achieving long-term capital growth through a globally-diversified portfolio, the fund’s largest holdings include Google parent Alphabet, Apple, Facebook, Samsung Electronics and Microsoft, according to its most recent factsheet.
Its top 10 positions accounted for 39.7 per cent of the 64 names in the portfolio, with the majority of its exposure coming from stocks in the US & Canada.
The fund also has greater exposure to mega-cap stocks with a market capitalisation of $50bn or above, representing 41.8 per cent of portfolio holdings.
A further 23 per cent is held in large-cap stocks with a market capitalisation of between $10bn and $50bn, while 31.9 per cent of the portfolio is held in the mid-cap space ($1bn-$10bn).
The fund has an ongoing charge figure (OCF) of 1.66 per cent. It also carries a performance fee of 10 per cent on outperformance of the benchmark Dow Jones World Technology index.
It should be noted that 10 tech funds have delivered returns of more than 50 per cent over the past year.
The best performer over three years is the five crown-rated Fidelity Global Technology fund, managed by Hyunho Sohn.
The £1.8bn fund has also delivered a respectable return of 56.55 per cent over one year and is the top performer over five years with a gain of 208.8 per cent.
Performance of fund vs sector over 3yrs
Source: FE Analytics
Sohn takes a fundamental, bottom-up approach focusing on identifying quality companies with sustainable growth prospects, according to Fidelity International.
“He believes that understanding technology trends, innovations and new technologies are key to identifying long-term leaders in the industry,” the asset manager noted.
The manager categorises investment opportunities into three categories: growth, cyclical and special situations.
Growth companies are focused on innovation or disruptive technology and set to experience high growth. Cyclical opportunities, meanwhile, can be found in technology sub-sectors and typically have strong market positions. Special situation opportunities typically consist of mispriced businesses with recovery potential.
In common with other funds in the sector, its top 10 holdings include a number of large North American names, such as Alphabet, Intel and Apple, according to the most recent factsheet.
The fund has a 63 per cent exposure to US stocks, an 8.6 per cent underweight to the MSCI AC World Information Technology index used by the manager for comparative purposes. It has overweight positions relative to the benchmark in Japanese, Taiwan and German stocks.
While it is the top performer over one and three years, the asset manager said noted that the fund is not suitable for investors who plan to sell their shares in the fund within five years.
The fund as an OCF of 1.07 per cent.
Just 10 of the sector’s funds have at track record of at least a decade. The best performer from among those is the £406.8m AXA Framlington Global Technology fund.
The three crown-rated fund has been managed by Jeremy Gleeson since 2007 and has delivered a 328.5 per cent return over 10 years, compared with an average return for the sector of 236.44 per cent.
Performance of fund vs sector & benchmark over 10yrs
Source: FE Analytics
The largest geographical allocation is to US stocks with sector giants again dominating the portfolio.
“Technology companies have started reporting results for Q1 2017 and providing update outlooks for the remainder of 2017,” Gleeson noted in the most recent factsheet.
“So far, these have been encouraging especially when compared with the broader equity market.
“Of the companies that have reported Q1 results so far within the MSCI World Index (representing the broader market), 68 per cent reported better-than-forecasted revenues and 72 per cent reported a positive upside to predicted earnings.
“For the technology component of the same index, the figures are 76 per cent and 75 per cent respectively. For the fsund, these figures are 75 per cent and 87 per cent respectively.”
The fund has an OCF of 0.83 per cent.
Other notable funds over 10 years include Pictet Digital, which has risen by 313.5 per cent, and Henderson Global Technology, up by 310.2 per cent.