When a Kiplinger 25 fund closes to new investors, we replace it because we believe the funds on our list should be available to all readers. American Century Small Cap Value (ASVIX), after a recent scorching run, closed in August.
When we looked for a replacement, we decided to change things up a bit. Five funds focused on small and medium-sized businesses remained on the Kip 25 list, but a fund focused on technology, a rapidly growing sector, was missing. This is why we add T. Rowe Price Global Technology (PRGTX, $ 31.62) at Kip 25.
Director Alan Tu, who searches the world for high-quality companies of all sizes, is not afraid to go his own way. It does not have Alphabet (GOOGL), Apple (AAPL) or Microsoft (MSFT), for example. The fund’s main holdings – Korean internet platform Sea Limited (SE), software company Atlassian (TEAM) and Zoom Video Communications (ZM) – are smaller in terms of market value.
“We are not bearish on mega-cap companies,” Tu says. But he sees promise in the smaller ones. “We are at the start of this era of digital transformation. Many trends that drive growth are accelerating, creating opportunities. “
Software as a service, for example, is entering a new phase. Instead of going to big companies to sign long-term contracts, Atlassian is going directly to the consumer. Social media businesses are moving towards e-commerce sites: Facebook users can purchase certain products directly from the platform. And the pandemic may have changed the grocery store forever. That’s why You like Grab, the Southeast Asian version of Uber Technologies (UBER) and DoorDash (DASH); it also owns a stake in the private grocery delivery service Instacart.
Earlier this year, Tu left Chinese tech giants Alibaba Group (BABA) and Tencent Holdings (TCEHY), which are reeling from regulatory crackdowns. “We have avoided a lot of carnage,” he says. But the restrictions are not a “death blow,” he adds, so these stocks may soon find a place in the fund.
You are relatively new; he became a manager in March 2019. But he has been a Price analyst since 2013, mainly for Global Technology, and he has the weight of the Price analyst bench behind him. Since taking control, the fund has gained 42.4% on an annualized basis, beating 83% of its peers.