Investors diversify away from UK into tech funds

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Brexit is among the factors driving investors to diversify away from the UK and into tech funds as well as equities in other geographies, according to the latest data from The Share Centre.

The Axa Framlington Global Technology and Henderson Global Technology funds both appeared in the top 10 most traded funds for October at the broker, the first time this year two tech funds have appeared in the list.

Investment manager Sheridan Admans says personal investors are moving away from the UK and seeking wider diversification.

Admans notes both funds have around 10 per cent of their holdings in Apple, which rolled out the iPhone 8 in October, which could have spiked interest.

Generally however, there appears to be a wider momentum in what is a very attractive and undervalued sector with clear longer term prospects.”

While the FAANGs have contributed significantly to the US rally, Admans says long-term forward P/Es across the sector remain attractive, albeit not as attractive as they have been.

Global equity funds from Fundsmith, Lindsell Train and Newton featured in the monthly top 10 along with the Legg Mason Japan, Jupiter India and Man GLG Continental European Growth funds.

Woodford Equity Income was still the top traded fund, while the Old Mutual UK Mid-Cap fund also slipped into the top 10, despite Admans noting the overall trend was away from the UK.

This is possibly a symptom of difficult Brexit negotiations and the possibility that the UK economy might be entering a slower growth trajectory than other developed economies.”

However, Woodford this morning reiterated its contrarian bet on the UK economy.

The fund boutique this week published a report on Brexit arguing that the negative effects of the UK walking away from negotiations without a deal have been overblown.