Lessons were learned by the sector in the dotcom crash, however, causing the entire industry to become more prudent.
Keeping a tight rein on finances is key to a company’s survival, particularly in present economic conditions, and technology is currently the only global sector with more net cash than debt on its balance sheet, putting many of these companies in a secure position.
This also gives them the means to expand through mergers and acquisitions or reward shareholders through share buybacks and increasing dividend distributions.
As the pace of our everyday lives continues to accelerate, we are continually placing demands on technology providers to meet these needs and the demand for technology is higher than it has ever been. There are an increasing number of people using mobiles, iPods and iPads, and to "Google" something is a term in itself.
The Henderson Global Technology fund is a good starting point for UK investors seeking exposure to the growing appetite for innovation and technological advancements. The fund is managed by Stuart O’Gorman and Ian Warmerdam and looks at the drivers of technology demand and seeks to benefit from them.
As economic uncertainty continues, the fund managers take comfort in the strength of the technology industry and companies that have growth themes such as online advertising, data growth, paperless payment and e-commerce.
Performance of fund vs sector over 5-yrs
Source: FE Analytics
The fund has a predominantly large market cap bias, with the portfolio generally holding between 60 and 80 companies. In terms of performance, it is ranked first quartile within its sector over five years, returning 51.21 per cent compared with 41.15 per cent from the average fund, while over three years it is ranked in the second quartile, returning 52.46 per cent.
Year to date, the fund is once again ranked top-quartile, having returned 4.24 per cent compared with the sector average of 3.9 per cent.
Henderson Global Technology has a minimum investment of £1,000 and a total expense ratio of 1.78 per cent.
Andy Parsons is head of investment research at The Share Centre. The views expressed here are his own.