22 Jun 2011
Many of us of an uncertain age will remember the BBC programme Tomorrow’s World which delighted viewers with expositions of inventions ahead of their time. The technology alluded to at 7.30 on Thursdays through the 1970’s and 1980’s seemed so visionary and futuristic.
However much of it has now been and gone. The technology boom and bust 1999 – 2001 was all about the internet. Today what we mean by technology is very different and diverse. It is not limited to computer and IT development. Change in technology appears now to be in a phase of exponential growth which allows large advances to be made incredibly quickly. Huge advances are apparent in diverse branches of knowledge – genetics, robotics, bi-technology, communications and satellite technology and alternative energy to name a few. All of these will spawn great commercial and market opportunities.
Where to invest and how to find the winners will be a challenge indeed for fund managers. Over the last decade, Scottish Mortgage has had holdings in Apple, Amazon and Google as well as introducing Baidu and Tencent to the portfolio. Now the Trust is looking ahead to the technological revolution of the next decade.
Cloud Computing and the explosion of data management is behind the purchases of Salesforce.com, Rackspace, Riverbed and F5 Networks. The looming death of carbon has meant a reduction in Petrobras and the inclusion of First Solar in the Trust’s top ten, plus there is Novozymes offering an organic slant on energy.
Healthcare will see big change as populations age and pricing pressures on Big Pharma bite. Cheaper and clever health options will need to be developed hence Scottish Mortgage’s holdings in Intuitive Surgical and Illumnia.
Whether we have found tomorrows winners in tomorrow’s world remains to be seen but what is certain is that the speed of technological change in today’s world will continue to surprise us.
Please remember that, as with all stock market investments, the value of shares and any income from them can fall as well as rise and investors may not get back the amount originally invested.
The views expressed in this article are those of the author and should not be considered as advice or a recommendation to buy, sell or hold a particular investment. They reflect personal opinion and should not be taken as statements of fact nor should any reliance be placed on them when making investment decisions.