“IT sector will lead the recovery,” says ex BlackRock tech manager
The world of private capital has witnessed a solid number of tech fund closures and tech related deals since the coronavirus crisis began. But despite the sharp rally that started in March and continued through April though, William De Gale, co-portfolio manager of BlueBox Global Technology, is cautioning against thinking that the rest of 2020 will be plain sailing for technology.
Prior to running BlueBox funds, De Gale managed the BlackRock Global Technology Fund for nine years. BlueBox’s portfolio typically holds between 30 and 40 positions with a maximum weight of 10 per cent, targeting companies between USD1 billion and USD100 billion market cap.
In De Gale’s view, old patterns of behaviour and business have broken down and will never be quite the same whether we like it or not - he predicts more automation, remote working, virtual meetings, e-commerce, online payments and medical research; less travel, desk-time, in-person, bricks-and-mortar or cash.
“[There will be] even more focus on social and environmental sustainability; a dwindling outlook for petroleum producers. The list continues, and most of the items on it point to greater use of technology, of solutions that are made possible by directly connecting systems to the real world without reliance on human beings as input and output devices,” said De Gale.
He continued: “This does not mean that the rest of 2020 is going to be plain sailing for technology. As news of the crisis develops over the summer, fear of second-order effects from the lockdown may once again panic markets and take equities to new lows. However, those second-order effects are likely to be much greater for “old economy” businesses, whereas much of the tech sector will be part of the solution.”
De Gale deems the IT sector to be in a good position going forward. “So with investors seeking safe havens or looking to 2021, we believe that the Information Technology sector has probably already experienced its low for 2020, and that it will continue to outperform the broader market and lead the recovery.”