Lorna Tan

Invest Editor

Q You have partnered T. Rowe Price International to feed your United Global Technology Fund into its Global Technology Equity Strategy. Can you explain how that works, and why the decision was made?A Under the partnership, UOB As-set Management will invest in T. Rowe Price’s Global Technology Equity Strategy through our United Global Technology Fund.

This means that, for the first time, retail investors in Singapore can invest in T. Rowe Price’s highly rated portfolio. This portfolio con-sists of well-known global tech stocks such as Google and Alibaba,

as well as companies such as Tesla that are at the forefront of using technology to grow their business.

Q What made you choose T. Rowe Price?A Within the asset management in-dustry, T. Rowe Price is known for

its investment expertise in tech equ-ities as it has been managing dedi-cated technology portfolios since 2000. It has an experienced team of 20 investment analysts and man-agers actively managing its Global Technology Equity Strategy.

By working with T. Rowe Price, we can combine our in-depth knowledge of Asian investment markets with its technology invest-ment expertise. These complemen-tary strengths will enable our clients – both retail and institu-tional – to invest in, and benefit from, the growth in tech compa-nies and technology trends.

Q How is the United Global Technology Fund different from other tech funds in the market?A The United Global Technology Fund is suitable for investors who are seeking long-term capital appre-ciation by taking advantage of growth prospects arising from tech-nological innovation.

Fund investors benefit from T. Rowe Price’s active management of its Global Technology Equity Strategy. It invests using a proac-tive bottom-up stock selection ap-proach that is based on the compa-nies’ fundamental strengths, such as their business model and the quality of their management team.

Active fund managers are better able to identify potential winners amid continuous technological in-novation and a rapidly changing competitive landscape. In contrast, passive fund management relies largely on relevant market indexes, which are based on stock perfor-mance and might focus only on large-capitalisation stocks.

Q What types of “tech themes” will be included in the fund portfolio? A The United Global Technology Fund’s portfolio is diversified across a broad spectrum of techno-logy sub-sectors, which include In-ternet, cloud computing, cyber se-curity and semiconductor capital equipment companies.

The fund also seeks long-term op-portunities in applied technology areas such as artificial intelligence, robotics, automotive, and indus-trial and home automation.

Q What is the macro outlook for the technology sector, and what are its growth prospects?A Technology is ingrained in the operations of most companies. What we are seeing now though is disruptive capability across almost every industry. Technology is being applied in new ways.

For instance, artificial intelli-gence and robotics are changing the way cars are produced and ope-

rated. Take Tesla – it has har-nessed technology to manufacture electric, self-driving cars at a rela-tively low cost.

Businesses are recognising a shift in the role of technology, as it moves from being a driver of mar-ginal efficiency to being an ena-bler of radical innovation and dis-ruption. We are convinced this wave of change is structural and in-evitable, and will thus create pock-ets of investment opportunity within the technology sector over the longer term.

Q Most of the fund’s holdings are in the United States. What are some of the major risks in the US tech sector at present and for the future?A The US remains at the forefront of technological innovation. The country’s laws governing intellec-tual property (IP) rights are con-ducive to creative incubation. It also has a large talent pool with strong entrepreneurial qualities. We expect the US to remain a key player in driving further technologi-cal innovation as long as the coun-try maintains its support for the in-dustry and IP laws.

Increasing rhetoric about trade protectionism by the Trump ad-ministration could cause a reac-tion from the rest of the world

against US products. Although this could jeopardise the performance of technology firms, a potential repatriation tax proposed by the Trump administration would be positive for companies with over-seas operations.

Q How has the tech sector performed against other sectors so far? A Our data shows that returns for the technology sector have been among the highest compared with those for other sectors over the past 10 years (data referenced up till last month). During the same period, the growth rate for the tech sector was also among the highest compared with that for other sectors.

Q What are your top three tips for retail investors keen on adding a tech fund to their portfolio?A First, check if the fund is actively or passively managed. With active management, a good fund manager is better able to select potential win-ners in the technology sector.

Second, review the stocks in the fund’s portfolio. Contributions to the fund’s performance should be well diversified across various stocks instead of from one single source. Also, ideally, the portfolio should consist of dominant techno-logy players with high entry barri-ers in their fields, such as Alibaba, and companies that are in rela-tively nascent stages of develop-ment and have significant room for growth, such as Tesla.

Third, consider the track record of the fund manager – it should be one that shows positive returns over the fund’s benchmark index for different time horizons such as three, five and 10 years.

Q What are your views on the global equities outlook for 2017?A Risk assets should outperform as the economic outlook improves and global inflation returns to nor-mal levels. Thus, we remain posi-tive about the outlook for global equities as the world’s economy continues to recover.

Further, expansionary monetary policies maintained by many cen-tral banks to stimulate their coun-tries’ economies would be positive for equities. Potential fiscal stimu-lus from US policymakers could also boost the American economy, with the impact spilling over to the rest of the world.

However, we remain mindful of policy uncertainties in the US, as well as geopolitical risks in the Ko-rean peninsula and from elections in Europe.

lornatan@sph.com.sg

For retail investors choosing a tech fund, Mr Shay Pang advises looking for a fund which is actively managed so that it is better able to pick potential winners in the rapidly evolving technology sector. The fund’s portfolio should be well diversified too. ST PHOTO: DAVE LIM

UOB Asset Management’s Shay Pang discusses the technology sector and the outlook for global equities in the latest in our series on fund managers and market experts. Mr Pang, senior director for international equities at UOB Asset Management, has more than 10 years of experience in investment management. As at June 30, year-to-date total returns for the United Global Technology Fund came to 14.35 per cent before the sales charge.

Fund managers series

POCKETS OF OPPORTUNITY

Businesses are recognising a shift in the role of technology, as it moves from being a driver of marginal efficiency to being an enabler of radical innovation and disruption. We are convinced this wave of change is structural and inevitable, and will thus create pockets of investment opportunity within the technology sector over the longer term.

’’MR PANG

Seeking growth in technology disruption

B16 | Invest The Sunday Times | Sunday, July 16, 2017