Tech is back – and we are watching these funds

The tech sector has caught the eye of Saltydog, but he is waiting for further gains before investing

Last month, overall fund performance was not as good as in April. The total number of sectors making gains fell significantly, as did average sector returns.

There are now more than 50 fund sectors, but the Investment Association (IA) does not provide average return data for a few of them because the fund objectives and strategies can vary so widely. A couple of years ago they also split the Global Bond sector into 14 new sectors, mainly to incorporate ETFs. Most of these sectors contain only a handful of funds (Unit Trusts and OEICs) so we still combine all the non-UK bond sectors to create our ‘Global and Global Emerging Market Bond’ sector.

This means that we end up reporting on 35 sectors. There were 21 sectors that rose in value in April, but only 10 in May.
 

 
There are just four sectors that made gains in both April and May: the two Money Market sectors, India/Indian Subcontinent, and UK Direct Property. Only the Money Market sectors also rose in March.

The leading sector last month was Technology and Technology Innovation with a one-month return of 9.1%, followed by India/Indian Subcontinent, which gained 4.1%, and Latin America, which made 3.4%.
 

 
Next came Japan, up 2.3%, and North America, up 1.6%. Nothing else made more than 0.5%, and most sectors fell in value. The worst, China/Greater China, fell by 7.5%.

Not surprisingly, the best-performing funds last month were also from the Technology and Technology Innovations sector, along with funds from the Global and North America sectors, which also invest heavily in the large US technology stocks.

At the top of the table is the T. Rowe Price Global Technology Equity fund with a one-month return of 16.9%. It reached an all-time high in November 2021, but by the end of 2022 it had fallen by 30%. Although it has made quite a recovery since then, it would still have to rise by more than 15% to get back to where it was.
 

Saltydog’s top 10 funds in May 2023

_{Data source: Morningstar. Past performance is not a guide to future performance.}

 
The Technology and Technology Innovations sector was one of the worst-performing sectors in 2022, falling by more than 27%, but has had a good start to this year. It rose 9.3% in January, and although February and March were not as impressive it still ended up being the best-performing sector in the first quarter of this year. It fell by 2.8% in April, but having gained 9.1% in May it is now up 22.7% since the beginning of the year.

We do not currently hold any funds from the Technology and Technology Innovations sector in our demonstration portfolios, but we are watching them closely.
 
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