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The case for technology equities

Alison Porter

Alison Porter

Portfolio Manager


Richard Clode, CFA

Richard Clode, CFA

Portfolio Manager


Graeme Clark

Graeme Clark

Portfolio Manager


30 Aug 2022
1 minute read

Key takeaways:

  • Technology is a positive force for innovation and disruption. It offers solutions to inflation due to its ability to create efficient products and automate production processes, and can also drive positive change in sustainability matters.
  • Successful tech companies tend to self-fund via their own profits and generally have less debt. These companies reinvest earnings to drive growth and capture market share – this is known as the flywheel effect.
  • The ability to pick the right point in the technology adoption curve, select the right companies and invest at the right valuation are key to generating consistent returns in tech.

Technology by nature is an innovative, disruptive and deflationary force, making things faster, cheaper, and more efficient. This means it can offer a solution to inflation, combatting higher input and labour costs given its capability to enable automation and create more efficient products and services. Technology companies also play a key role in sustainability. The major challenges faced by the world today such as climate change, resource constraints and poverty & inequality are all leveraging on innovative new technology for solutions.

Although the sector is characteristically volatile by nature, multiple secular growth themes that are driving technology demand give rise to some undeniably attractive opportunities for investors.

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These are the views of the author at the time of publication and may differ from the views of other individuals/teams at Janus Henderson Investors. References made to individual securities do not constitute a recommendation to buy, sell or hold any security, investment strategy or market sector, and should not be assumed to be profitable. Janus Henderson Investors, its affiliated advisor, or its employees, may have a position in the securities mentioned.

 

Past performance does not predict future returns. The value of an investment and the income from it can fall as well as rise and you may not get back the amount originally invested.

 

The information in this article does not qualify as an investment recommendation.

 

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Alison Porter

Alison Porter

Portfolio Manager


Richard Clode, CFA

Richard Clode, CFA

Portfolio Manager


Graeme Clark

Graeme Clark

Portfolio Manager


30 Aug 2022
1 minute read

Key takeaways:

  • Technology is a positive force for innovation and disruption. It offers solutions to inflation due to its ability to create efficient products and automate production processes, and can also drive positive change in sustainability matters.
  • Successful tech companies tend to self-fund via their own profits and generally have less debt. These companies reinvest earnings to drive growth and capture market share – this is known as the flywheel effect.
  • The ability to pick the right point in the technology adoption curve, select the right companies and invest at the right valuation are key to generating consistent returns in tech.