Tapping into technology sector to increase your investment yield?
Do you know technology sector is the best performing sector for the recent few years? Due to the current pandemic, the demand for technologies has increased even more which contributed to higher revenue for the technology companies.
Source: Google: XLK sector fund performance
Based on the above, you can see the technology sector has been growing steadily since 5 years ago. The sector has grown nearly 150% for the past 5 years. If you are a potential investor thinking which fund you can tap into to increase your investment yield, here is the suggestion – TA Global Technology Fund managed by TA Securities (this is for education purpose and talk to your investment advisor before investing). Why this fund?
This is one of the oldest active managed funds available in Malaysia which can show consistent return over the past 10 years. In the recent few years, there are few more funds being introduced in Malaysia such as Principal Global Technology Fund launched in 2018 and United Global Technology Fund launched in 2017.
As shown above, the TA fund has grown more than 400% since the inception about 10 years ago, this translates to 18% annualized return. This is a fantastic return. For the past 5 years, the return is 173.53%, it is above the XLK sector fund.
Principal Global Technology Fund has delivered return of 117% over the past 3 years (as of June 2021) and United Global Technology Fund has over 105% return over the past 3 years (as of August 2021). Both these 2 funds have slightly better return than TA fund. However, these 2 funds have been launched only recent few years, the consistency of fund performance over longer term cannot be assessed.
By looking at the above, TA Global Technology Fund and Principal Global Technology Fund focus more on big and established companies while United Global Technology Fund focuses more on emerging companies. Hence, United Global Technology Fund has higher volatility compared to TA fund.
Principal Global Technology Fund is quite a country focus fund with more than 88% of investment in US while TA Global Technology Fund has near to 80% of exposure in US with slightly more diversified regional portfolio.
By investing in the TA fund, investors can invest in the big and expensive companies like Google (Alphabet), Microsoft, Apple, Facebook, Amazon, Visa, Adobe, etc. easily without needing a big capital.
Amazon share price now is USD 3500
Google share price now is USD 2800
Microsoft share price now is USD 300
Apple share price now is USD 150
Facebook share price now is USD 370
Adobe share price now is USD 660
If we are to invest 1 share of the companies above, the total capital required will be USD 7780. It shows it will be more affordable for retail investors who want to start with lesser capital. The minimum investment for this fund is RM 1,000 or RM 100 monthly investment.
Charge of this fund is up to 5.5% for front end sale charge. The management fee is 1.8% per annum. Even with considering the management fee, the fund is performing better than the Technology SPDR fund for the past 5 years.
If you are interested to know more about this, you can contact me.
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