In the week where Apple’s valuation surpassed $1,000,000,000,000, Moneycube looks at tech companies’ changing fortunes, and what it means for Irish investors.
Over the last few years, Facebook, Apple, Amazon, Netflix and Google (aka Alphabet) have become major sources of stock market growth.
Together, they account for around one eight of the main US index, the S&P 500. Most of our pensions and investment funds have substantial exposure to them.
The gap is growing
But the US technology giants have begun to report widely diverging results. In short, the gap between the FAANGS is getting bigger.
Top of the class is Apple, the first ever company to achieve a trillion-dollar market valuation. It reported a 17% increase in sales last Wednesday.
On the other hand Facebook, Netflix and Twitter all reported disappointing results, with Facebook suffering the biggest ever one-day drop in value of a listed business – an eye-watering $120 billion.
What does this mean for me?
This recent bumpy ride has a couple of lessons for Irish investors.
Above all, the big consumer technology businesses have continued to deliver rapid growth, even as they have become massive companies. Normally, great quarterly growth is possible for a start-up, but slows as the business becomes bigger.
But the technology companies’ fast growth now comes with potentially large ups and downs.
Of course, the FAANGS can’t all grow forever at breakneck rates. In a few years, it’s likely that the pitch will clear. Not all of today’s fast-growth tech stocks will be winners.
But for now, exposure to the giant US technology companies is a need-to-have for most investors in search of strong growth prospects.
How can I access these stocks?
Moneycube’s specialty is helping Ireland-based investors obtain access to diversified investment funds. So in general we don’t believe you should put all your money into a single sector, whether technology or anything else.
That said, many funds available in the Irish market offer a substantial allocation of technology stocks.
Zurich’s 5*5 global equity fund, for example, has invested over 14% of its value in Alphabet, Microsoft, Facebook, Amazon and Apple. It also has exposure to Chinese tech giants Alibaba.
Alternatively Morningstar’s Global Allocation fund invests around a quarter of its assets in the US S&P 500 and represents good value to Irish people looking to invest large lump sums.
Get started with Moneycube today to put a diversified investment plan in place.