The Marlborough Technology fund is being rebranded with a broader investment remit and moving to a different Investment Association sector so that manager Guy Feld can invest in a wider range of companies.
The fund is being renamed the Marlborough Global Innovation fund from 22 September and moving from the IA Technology and Telecommunications sector to the IA Global sector.
It is the second Marlborough fund in as many months to change its investment focus after Marlborough Special Situations announced in June a broadening of its investment policy to include companies higher up the market cap scale, as well as moving to a different IA sector.
Capturing ‘technology-enabled’ businesses
Marlborough said the change to Marlborough Technology enabled Feld (pictured) to invest in businesses that while not formally categorised as technology companies, have strong growth prospects because of the way they use technology or business processes.
Before the switch, 80% of the fund had to be invested in shares of companies formally classified as either technology or telecommunications businesses.
Feld, who became manager of the fund on 1 September 2020 following the retirement of Connor McCarthy, said there are many companies not formally classified as ‘technology’ companies that generate value through being technology-enabled.
He said: “Technology companies can sometimes be thought of very narrowly as those producing hardware, software and services based around silicon chips. We’re interested in exceptional companies doing that, of course, but we believe the opportunity set for this fund should be far greater.”
Feld said one example of a “technology-enabled company” is newspaper and magazine publisher Reach which is formally categorised as a media company but it has digital technology powering its growth strategy.
At least 50% of the fund will be invested in smaller companies and it is expected that a minimum of half of the portfolio will be invested in a mixture of companies listed on North American and UK markets.
“While we hold some outstanding large cap stocks, our particular expertise is at the small cap end of the market, so our primary focus will be finding the next generation of technology, technology-enabled or IP-driven success stories,” said Feld.
Those wanting outright tech exposure might look elsewhere
AJ Bell head of active portfolios Ryan Hughes said he is not often an advocate of funds being repurposed into something different as it moves away from what investors originally invested in and does so without investors being given a say in the change.
He added: “The focus on smaller companies sticks to Marlborough’s strength and existing investors may feel this is sufficient to retain their position in the fund, but if they want outright technology exposure, they may be better served looking elsewhere. With strong options from the likes of Polar, Sanlam and Allianz, there is no shortage of high-quality technology options.”
Fairview Investing founder and consultant Ben Yearsley said a question for all investors is: what is ‘tech’ now?
“Many companies thought of as tech aren’t in the tech sector now,” he said. “What is Netflix? What is Tesla? Are they tech companies or is one media and one a car maker? So, to that end the name change probably makes sense and gives the managers more latitude, and also keeps investors better informed as to what the fund is about.”
