Fund wins Lipper Fund Award and passes the 100 million euro mark
At this year’s Lipper Fund Awards in Frankfurt DNB Technology Fund came up trumps, winning the award for best fund over a five-year period in the category ‘Equity Sector Technology, Media and Telecommunication’. The success of our management team under the leadership of Anders Tandberg-Johansen is equally apparent from demand for the fund, which recently broke through the significant 100 million euro barrier. And in the shape of sister fund DNB TMT Absolute Return, the long-short version has also impressed.
25 February 2014 The DNB Technology Fund management team can pride itself at success on several fronts. Firstly, at this year’s Lipper Fund Awards they were recognised as the best over a five-year period in the category ‘Equity Sector Technology, Media and Telecommunication’. Meanwhile, in addition to the Lipper Award the fund has also been assigned the top five-star rating by Morningstar, and on top of this the fund’s volume has steadily grown and has now broken through the 100 million euro barrier. The capital flows into the tech fund launched by DNB Asset Management in August 2007 derive chiefly from institutional investors based in Austria, Luxembourg and Germany. "The anticyclical GARP approach adopted by the management team under the leadership of Anders Tandberg-Johansen has paid off. Both the alpha generated over the course of the years and the recent awards and influxes of funds are the best proof of that”, notes Mike Judith, Co-Head of Sales at DNB Asset Management S.A.
The DNB Technology Fund’s anticyclical strategy
The fund can look back on a strong track record of continuous outperformance of its benchmark. Since its launch it has yielded annual growth of 11.8% as against the benchmark’s 4.1% (66% MSCI Tech, 12% Media, 22% Telecom Index). The portfolio managers apply a classical, fundamentals-based stock-picking approach, with little regard given to short-term trends and hype. Their GARP strategy assigns a central role to the evaluation of equities on the basis of key performance indicators and financial ratios, while special attention is also paid to value chains and long-term trends. This is particularly necessary in a sector characterised by enormous innovative power and dynamism which not only throws up winners but also a great many losers. To identify the first an anticyclical approach is needed. Only then did it become possible for the team to register a handsome profit from the ‘loser’ Nokia. By building up a position early on and against the trend, the fund was able to benefit substantially from the sale of Nokia’s mobile phone unit to Microsoft. “Running counter to market sentiment calls for staying power”, acknowledges portfolio manager Anders Tandberg-Johansen, “but it is precisely here that we add value for our investors.”
Long-short approach also impresses
While individual Internet shares break into new fields and see their prices skyrocket, the giants of the sector, such as Google and Samsung, are available at knock-down prices. Facebook’s takeover of WhatsApp for USD 19 billion is further proof that two clusters have formed within the sector: on the one hand we have the ‘New Technology Club’ comprising the leading social media platforms and highly innovative 3D printing firms, while on the other hand there are the established giants such as Google, Apple and Samsung. This heterogeneous environment, leading in some cases to contrary trends, creates an attractive equity universe for long-short approaches, where numerous winners are set against equally large numbers of losers. The management team exploits this in the strategy it applies for the market-neutral DNB TMT Absolute Return Fund which it also manages. Here they aim to achieve significant outperformance of the money market, with a volatility of from five to 15%. To date this market-neutral approach has paid off. Since its inception the fund has achieved annual returns of 4.4%, with volatility of c. 8% and net exposure ranging between +20% & -20%. Year on year the fund is 14.4% up.
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