The bull run of the past decade seems to be taking a big pause in 2020. You may remember that in the last decade tech shares in particular helped fuel that rally. Many investors may not necessarily associate FTSE 100 shares with technology. Yet I believe the UK’s main index provides ample opportunity for growth, especially if you’re looking to retire wealthy. Let’s take a closer look.
The tech sector
Broadly speaking, tech companies develop, manufacture or offer technology-based services or products. The sector encompasses a wide range of businesses, from telecommunications, to personal computers, semiconductors, e-commerce, software as a service (SaaS), cloud computing, fintech, online social networks, artificial intelligence (AI), and internet of things (IoT).
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We first tend to think of companies headquartered in Silicon Valley or Seattle in the US, such as Amazon, Apple, Google, or Microsoft when we mention tech shares. Nonetheless, the UK also has promising technology businesses with plenty of scope for future growth.
The London Stock Exchange’s techMARK market “was launched in November 1999 by the Exchange to create new opportunities for companies whose business is dependent on technological innovation, and for investors in those companies”.
And the FTSE techMARK All-Share Index comprises all companies included within the techMARK market. There are currently 26 UK-listed companies in the index.
The list includes large-cap as well as medium and smaller companies, which are growing fast and offer potential for impressive stock price gains. Investors may use the index as a starting point to research tech shares further.
Our blue-chip FTSE 100 index also offers several possibilities for investors to consider. I believe many of them may provide long-term returns to help investors retire wealthy.
FTSE 100 tech shares
One of the most successful stocks of the past decade has been Aveva. It provides engineering and industrial software. Then there’s global defence contractor and cyber security firm BAE Systems. Year-to-date (YTD) both shares are down by 13% and 15% respectively.
Telecoms giants BT and Vodafone are two tech-based names that may increasingly benefit from the current stay-at-home and work-from-home economy. Multinational consumer credit reporting company Experian may become another business to ride the Covid-19 wave. Many consumers and business are likely to rely on credit data as uncertainty begins to take its toll on many economies.
Bookmaker holding company Flutter Entertainment is another stock to watch. Since March, due to the lockdown, sports fixtures have been cancelled worldwide. Yet as economies begin to open up, the company is likely to see revenue growth in the coming months.
Stock exchange and financial information company London Stock Exchange Group may also come out of the current volatility in acceptable financial shape. The lockdown shouldn’t affect its business model much.
Engineering group Halma specialises in products for hazard detection and life protection. Although not a household name, its stock has been a robust long-term investment.
Online retailer Ocado is regularly in the news. The group is currently working around the clock to answer the increase in demand for online grocery shopping. From warehouse to delivery routes, the business is highly automated. In late 2019, it successfully sold its automated technology to Japan, a leader in robot technology.
Finally, cloud-based accounting and payroll services provider Sage Group may deserve further due diligence as a tech share to consider to retire wealthy. YTD, the shares are down by 12%.