New Fund Launch | Invesco India Technology Fund - 03rd Sep 2024 to 17th Sep 2024
Today, you cannot imagine a world without technology. Technology is at the center of everything, from communication to financial markets to banking, e-commerce and healthcare, etc. It touches almost every aspect of our lives. And now, we are talking about another transformative era. Disruptive technologies are creating new growth opportunities across various sectors, from AI to Robotics, Cloud computing, Virtual Reality, Cybersecurity, and the Metaverse. These newer technologies have brought about a big change on how businesses operate while offering additional growth opportunities for IT companies to expand and innovate.
The sector today finds itself at a very important juncture, where it is not just resilient today but preparing to thrive once again, offering an opportunity for those who would like to invest.
The recent headlines have highlighted a slowdown in the tech sector, with companies postponing tech investments, and IT companies hiring less people. However, the economic landscape is shifting, and the sector is poised for revival.
Factors which support this optimism include :
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Robust Fundamentals: Despite challenges, the tech industry has maintained robust fundamentals including improving revenue growth, high return ratios, healthy cashflows, superior dividend payouts thereby demonstrating resilience.
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Strong Deal Momentum : There is significant deal activity in the tech sector, signalling a sustained business activity.
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Valuations : Valuations in the tech sector have corrected from its peak. Further, we expect earnings upgrade driven by improving business sentiments.
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Potential Interest Rate Cuts: With expected interest rate cuts on the horizon, borrowing costs will decrease, and we can anticipate a renewed interest, as companies that had previously postponed their technology investments are likely to resume spends generating demand for technology solutions.
The fund will invest across companies such as IT services companies, consulting, outsourcing companies, IT infrastructure, IT hardware, new-age tech, engineering research and development, internet-enabled businesses (e-commerce, fintech, technology platforms), telecommunications, media and media infrastructure, electronics, semiconductors, and industrial technology.
From an investment strategy perspective, the fund will invest in :
- A diversified portfolio of equity and equity related instruments of technology and technology related sector with an aim to generate long term capital appreciation.
- In companies that are at the forefront of technological innovation, particularly in sectors like automation, AI, cloud computing, and companies benefitting from digital adoption.
- Investments will be made in Indian technology companies as well as global technology companies and innovators (subject to availability of investment limits), providing a balanced exposure to both local and international markets
- The fund will invest across market capitalization*
Investment Framework and Strategy
- The fund aims to achieve long-term capital appreciation by investing in a diversified portfolio of equity and equity-related instruments, focusing on technology-centric and technology-dependent companies
- A combination of top-down and bottom-up approaches to identify high-growth companies at the forefront of technological innovation, with a focus on transformative sectors like automation, AI, cloud computing, and digital adoption.
- Investments across market capitalization, balancing large-cap stability with mid-cap growth and small-cap potential.
- Target investments in India’s digital transformation alongside global technology leaders and innovators.
- Diversified exposure with a strong risk management framework.
Why invest?
After witnessing two challenging years, the IT industry is poised for a revival, supported by an improving global economic environment and the prospect of a more favorable interest rate climate. An early exposure to the IT sector presents a unique opportunity to capitalize on potential earnings upgrades.
Key reasons driving the revival in IT sector-
- Imminent Interest Rate Cuts - The global monetary policy backdrop has turned favorable as major central banks have already commenced their rate cut cycles with US expected to follow the course. As rate cut unfolds, the IT sector is expected to benefit from improving business sentiment and rise in discretionary spending.
- Strong Deal Momentum - The deals pipeline remains robust, indicating sustained business activity.
- Digitalization - Digital consumption is growing at a breakneck speed and will play a crucial role in driving growth for IT companies.
- Valuations - Valuations have corrected from its peak and earnings have bottomed out. We expect earnings upgrade driven by improving business sentiments.
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The new fund offer opens on September 3, 2024 and will close for subscription on September 17, 2024.