Investment Approach

Companies are sought where the technology brought to bear has the potential to make a significant impact on existing markets or introduces a new product or service to the market. The technology may be sector specific or it may be applicable across industries.

The Fund aims to identify companies with the greatest potential to meet the Fund's investment objective. To best capitalize on the expected returns, the number of positions in the portfolio is limited to 25. While this may lead to greater shorter term volatility in the Fund’s return profile, each investment is held for an average of 5+ years to enable the Fund to participate in the growth of each company invested in.

New technology or applications of such are a necessary but not sufficient criteria for investment. Companies are assessed for financial strength specifically the ability to sustain future growth from existing liquidity reserves and revenues. As such, gearing constraints and serviceability criteria are applied against potential security investments. The likelihood of new stock issuance and/or dilution is also considered. This requires an understanding of each cashflows for all potential investments.

Further, investments are typically assessed for revenue growth, expense disciplines, margin sustainability and R&D expenditure on an absolute and relative basis. Although not an exhaustive list, this forms a core part of all potential security investment assessments.

The above allows for an assessment of valuation. Through a net present valuation approach, primary consideration is given to a view of reasonable earnings growth prospects compared to that implied by the current share price. Other traditional valuation measures are also applied. Owing to the hype often surrounding technology stocks, considerable emphasis is placed on historic financials so that a reasonable basis for growth prospects can be made.

Non-financial elements also form an important part of any assessment. Specifically, the industry, sector or product growth potential; where the company sits in its space relative to its peers if it has any; what are the major shifts and issues facing the industry that present the opportunity for new technology or new application of technology; is the company demonstrating an ability to capitalize on such opportunities; and board composition and tenure.