It's time for technology
Australian investors have flocked to BT Funds Management's new technology fund pouring A$120 million into it since it was launched two months ago.Ba
Tuesday, May 16th 2000, 12:00AM
The TIME fund, which invests in telecommunications, information technology, media and enterprises stocks around the world, was launched to advisers in New Zealand yesterday.
While the fund has attracted strong support in Australia from advisers and investors alike, it has already demonstrated one of its defining characteristics - volatility.
Investors who put money in at the start have seen their investment fall about 8 per cent due to the correction in technology stock prices in the United States.
TIME portfolio manager David Mills warns investors that the fund will continue to be volatile, however investors prepared to accept the risk over a long period of time should be rewarded with good returns.
"Heart of heart I personally think (the fund will return) 20 to 25 per cent (over the long term)" he says. "Now the reality is it's likely to be 15-20.
"Underlying earnings growth says it should be 20-25, but there's probably going to be a degree of ratings compression which might bring it back to 15-20."
Despite the fund falling in value since its launch it has performed in line with its benchmark index and it has fared significantly better than the Nasdaq index.
Because the Nasdaq is US-centric and includes many stocks other than technology companies, BT has had Morgan Stanley build a custom index which better represents global technology stocks.
The fund has tracked the new MSCI-BT TIME index closely in its short life span and has beaten the Nasdaq.
A key new product feature of the fund is the introduction of a drip feed savings plan where invests can have a direct debit from a New Zealand bank account into TIME which is an Australian dollar fund.
This is useful for investors who which to dollar-cost-average into this volatile sector.
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