Hugh Grieves, the manager of the £50m SG Technology fund, has reduced the portfolio’s exposure to mega cap stocks in his search for the “winning companies of tomorrow”.
Grieves, who took over lead management of the fund from Alan Torry at the end of July, says the best returns in the technology sector will come from earlierstage, emerging companies rather than the more mature, traditional
From June 30 to October 24, Microsoft and Google for example, have seen their weightings reduced, from 5.1% and 4.8%, to 2.3% and 2.4%, respectively.
“It’s about identifying the newer emerging companies,” he says. “You’re
not going to get rewarded for holding Dell or Cisco. Companies are changing how they deliver IT [and] the traditional software model will struggle.”
Grieves, who was deputy manager for eight years on the fund, admits this
is not a quick process. Nonetheless, he adds, the “first winners” are emerging. The area to look at, he says, is corporate technology spending.
“Consumer spending on tech is going to be pretty unexciting for some time,” he says.
“[But] Consumer spending on anything is not going to be
exciting for some time. Some corporate spending on systems
will happen regardless.”
Grieves is focusing on technology
that saves companies’ money – Indian outsourcing firms, for example.
“Where you have tech companies that offer money-saving solutions, that’s attractive,” he says. “It’s about trying to find tomorrow’s winners. Valuations have
always been sky-high, but now it’s a lot more possible and positive. [Now there is a] chance to buy them at knockdown
“Enough bad news is being priced in. The tech market is more likely to go up than down from here.”