The technology sector has been the investment story of the past decade, as US technology giants such as Facebook, Amazon, Apple, Netflix and Google-owner Alphabet have delivered outsize rewards for investors.
Tech-focused investment trust Allianz Technology (LSE: ATT) has reaped the benefits, it is now up an astonishing 512% in the last 10 years, making it the best performing fund in the investment trust sector, slightly ahead of Scottish Mortgage at 509%, according to figures from the Association of Investment Companies.
It has achieved this by investing in a spread of mostly US stocks – the fund has 90% exposure to the States. It is crammed with familiar tech names, with Microsoft its biggest holding at 7.60% of the portfolio, while Facebook, Apple and Alphabet also figure in its top 10 holdings, alongside Taiwan Semiconductor and MasterCard.
The fund has consistently performed the IT Technology & Media sector and still has momentum, up 38% in the last year. Unsurprisingly, it trades at a narrow discount to net asset value of just -0.8%, slightly more expensive than its long-term average of -3.4%.
Allianz Technology is clearly a good fund, the big question is what happens to the sector next. You should never buy an investment purely on past performance, as the chances of a repeat are slim. Nobody can bank on getting another 500% growth in the next 10 years.
I still believe the tech charge has further to go, as it embeds itself ever more closely into our lives. The revolution may still be at an early stage, and this fund could be a good way to play it without the risk of buying individual stocks.
Finsbury Growth & Income
These days everybody loves Nick Train, who co-founded Lindsell Train Limited in 2000, and has become one of the UK’s most renowned fund managers. He runs several hugely successful and popular unit trusts with co-manager Michael Lindsell, and has his own investment trust, too, Finsbury Growth & Income (LSE: FGT).
This operates in the UK equity income sector, where it has done brilliantly well, returning a total of 366.43% over the last 10 years, including reinvested dividends.
Top holdings include familiar FTSE 100 names such as Diageo, Unilever, Burberry Group, Schroders and Hargreaves Lansdown, but this is no closet tracker filled with the same old stocks, as you often see in the equity income sector. Train is picking his stocks carefully, and well.
Last time I looked at his trust, it was trading at a premium to net asset value. Today, you can buy it at a small discount of -2.4%, which is actually below its long-term average premium of 0.5%, making this a potentially better entry point. Nobody likes overpaying if they can help it.
In fact, these two funds could complement each other nicely. Allianz Technology will give you a spread of racy tech stocks, mostly from the US, while Finsbury Growth & Income will give you a solid blend of UK income stocks.
Both should make good long-term portfolio holds.
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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Harvey Jones has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Alphabet (A shares), Amazon, Apple, Facebook, Mastercard, Microsoft, Netflix, and Unilever. The Motley Fool UK has recommended Burberry, Diageo, and Hargreaves Lansdown and recommends the following options: long January 2021 $85 calls on Microsoft and short January 2021 $115 calls on Microsoft. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.