DNB Technology - Fonds professionell Kongress Vienna 03/2015

Mike Judith, Vice President, DNB Asset Management, Luxembourg:
Erling, we received very good feedback from our investors here in Vienna. This is because the DNB Technology fund yielded 14% on average, annually. We are well ahead of the MSCI TMT, the Benchmark, with 6% annually. And also in 2014, you were among the best European Tech funds. How did it come about that we are slightly behind the benchmark in 2014?

Erling Haugan Kise, Analyst, DNB Asset Management, Norway:
To outperform the benchmark over time you need to be a bit different in how you take your exposures. The way we do it in the team is we focus a lot on small capitalization companies, companies that are less followed by analysts and other investors, and last year small caps unperformed the broader tech space, we suffered a bit there. Also we tend to focus on companies that are exposed to key transitions within technology where investors are a bit fearful even though we think earnings momentum will continue and stay positive. A third reason is that we did not own Facebook. We are very positive to Facebook and the kind of decision they have in the transition from TV-based to Online advertising, we just find the valuation to be too challenging. We own Google instead - positive earnings momentum, and the stocks we have in the portfolio will lead to outperformance in 2015 and beyond.

Mike Judith, Vice President, DNB Asset Management, Luxembourg:
Asset allocators can choose from all available asset classes and themes. It is extremely important to point out the attractiveness of the competitive position of the global technology space. How would you describe this position?

Erling Haugan Kise, Analyst, DNB Asset Management, Norway:
We don’t try to forecast markets over short periods of time, we don’t have a crystal ball. What we look for in the team are companies that have a strong position within key trends in technology while staying very disciplined on valuation. Having said that, we are quite optimistic about the growth of outlook for the technology sector. We are seeing technology companies really taking the next step, growing and taking share from traditional industries. And one of the strongest chances in this regard is the shift from offline to online. So, really, we are very optimistic about the growth outlook for tech companies and when you compare that to the earnings multiple you have to pay to buy this exposure. Tech companies are at about 17 times earnings which is the same as the market multiple, yet they are growing about twice as fast and it is stable secular growth. We really think that, in this environment, you can’t afford not to have a certain exposure to the tech universe.

Mike Judith, Vice President, DNB Asset Management, Luxembourg:
We like to look back at the historic performance, which was quite outstanding. And now we are in 2015 and we are off to a pretty good start, again. How would you describe the current positioning of the fund, Erling? 

Erling Haugan Kise, Analyst, DNB Asset Management, Norway:
For the fund, we have had some very good performance from some of our smaller cap investments. And also Samsung, with the launch of the new Galaxy smartphones series, has started to show some earnings upgrades. Samsung is one of the cheapest stocks in our universe so we expect a significant re-rating there in 2015. We are also quite excited about shift of advertising spending from TV to online. We own Google there, which is kind of the toll booth to the internet, and we think a lot of the ad dollars will end up there. Actually, 2015 will be the first year when total spending of advertising on the internet will exceed that of TV and you can buy Google at 17 times earnings today, the same as the market multiple. The earnings are growing about 16% and we see a significant operating leverage ahead for that business.