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06-2022

Tech Fund halved its losses for the year

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Technology companies are also not far behind in the rally that the stock markets have experienced from yearly lows. Since the Nasdaq 100 touched its levels in mid-June, it has recovered 19%, although losses in the year are still large. And European technology has followed the same path, recovering more than 15% from the soil. The story of discounting in the market has changed. in the last weeks Stock markets have bought into the possibility that inflation is peakingSomething remains to be seen, which will make it easier for central banks to apply the brakes when raising rates.

The sector’s recovery in the stock market in recent weeks has also been a relief for investment funds that seek opportunities in technology, and which in the past have given participants great pleasure with double-digit annualized returns (of 15%) Is. Over a three-year period thanks to the fact that over the years, including the pandemic, technology has benefited from rapid development. On the other hand, in 2022, some funds accumulated losses of up to 50% by JuneIn the midst of the collapse of these listed companies.

According to data from Morningstar, as of August 17, technical funds available for sale in Spain at that time had lost an average of 30%. Whereas now these have been reduced to 15 percent. Then, compared to the current 77%, only 20% escaped bearish territory (that is, they fell less than 20%). But still, according to the latest data available on Morningstar, European investors have withdrawn up to €5,000 million from this type of fund so far this year.

The market has bought the message in recent weeks (inflation could be peaking) The message tech companies have given is because of their sensitivity to rates. Javier Ruiz, director of investments at Horos AM, explained this correlation in a letter to investors a few months ago: “Let’s assume that the valuation of businesses depends on their future cash flows that result from discounting at the present time.” To discount these flows, we apply a rate that, very simply, depends on the return on assets considered risk-free. At higher interest rates, the return offered by these risk-free assets is as high as higher and higher will be the discount rate required. Therefore, if they rise (or interest rates are expected to rise, the valuation of the company suffers),” he elaborated.

Despite the rebound from low levels of technology in the stock market, Among those available for sale in Spain, none of the investment funds stands out with profits in their annual marker, The one that is closest to erasing the loss gives a yield of 1.39%.



Tech Fund halved its losses for the year

The Worst People of 2022

What’s more, the category of investment funds focused on this sector is still one of twenty that have suffered the most this year, along with the Russian stock market, or a variety of small-cap funds, which do not favor a scenario. Huh. of low economic development.

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