“Obviously, there will always be stock specific opportunities, but we are thinking about tech at an aggregate level and it’s a very crowded area,” she adds.
Of course, one of the reasons the US tech behemoths are so expensive and have shown such staying power is because of their disruptive potential.
Browsing the top companies comprising the MSCI World Index Tracker fund, Broomer says he was struck by the fact that the former heavyweights, like the big banks, had been supplanted by the likes of Apple, Facebook and Amazon.
Bubble
Though one could make the argument that the sky-high valuations underscore a massive market bubble, “I think it is a reflection on the way world is changing,” says Broomer.
“One of the first things Amazon did after it bought whole foods was slash grocery prices by 25-30%. Markets are really worried by business models that could be ‘Amazoned.’ The disruptive potential for so many businesses is quite alarming.”
Also, while a firm like Amazon may be working in consumers’ favour at the moment, by offering up a wider range of products at competitive prices, there is a limit to how disruptive they can be.
At what stage does the company become too big through its conquests that the anti-trust alarm is sound and the regulator steps in?
There are clearly a number of cons when it comes to investing in the tech sector. But until that point at which value overtakes growth completely, Apple and co are likely to be perceived as relative beacons of safety, against a highly uncertain political backdrop.
