The case for technology equities
1 minute read
- 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.