Science and technology funds: what to buy? … two funds shine brighter than the rest - Admax Global Health Sciences and Green Line Science and Tech

For those investors who have considered buying a science and technology fund to cash in on the long-term technology revolution, we offer the following words. First off, owning a fund rather than individual equities in the technology sector is wise because many of the companies involved in this industry have short life spans. However, finding the right fund can be difficult because most of these funds represented in this obviously trendy sector are newer than the companies they hold.

Related Results


[Part 1 of 2]

                 Higher performing science and tech funds

                              1 mth  3 mth  1 yr.  3 yr.  std. dev.


Admax Global Health Sciences   -5.4    0.7    1.1   25.9        4.7

Green Line Science and Tech.   -6.6  -12.6   -3.8   22.8        5.8

[Part 2 of 2]

                 Higher performing science and tech funds

                              exp. ratio


Admax Global Health Sciences        2.79

Green Line Science and Tech.        2.59

In fact, over half of these funds have less than a year under their belts. Some are so new they don't have both legs in their trousers. In this downright volatile sector, it would be wise to stick with the veteran managers, ones who have been running funds for two or three years. Few have been around longer. Out of the 23 funds in this sector, according to Portfolio Analytics, only four have been running for three years. Within these four, returns vary markedly.

Two of the funds have returned around 25% per year while the other two managed only around 10%. The Admax Global Health Sciences Fund and the Green Line Science & Tech funds are the stronger performers while the Dynamic Global Millenia and the Hyperion Global Science & Tech are the losers.

The Green Line fund is, however, the riskiest of the bunch, with a three-yr. Standard deviation of 5.7 vs. 4.7 for the Admax fund, 4.3 for the Dynamic fund and an impressively less-volatile 3.5 for the Hyperion fund.

None of these 23 funds qualify as RRSP content since they are all heavily invested outside of Canada. Many invest heavily in the U.S. tech sectors and, therefore, may correlate strongly with many plainer U.S. equity funds.

These funds deserve a questionable designation in one's foreign content of an RSP portfolio. One purpose of holding foreign content is risk reduction. Theoretically, holding funds invested in foreign markets that do not correlate strongly with the Canadian markets will reduce the overall risk in an investor's portfolio. Though these funds qualify as foreign content, it is likely that the fortunes of the companies held by these funds are tied to factors that strongly affect North American, and more specifically, Canadian equity prices.

Furthermore, these funds are not a one way bet over the long run. The tech sector itself promises to grow impressively over the next decade, but this growth may not show up in these funds' long-term returns. The attrition rate in tech companies is high, and for every winning company there is a loser. In the end it is up to the manager to sort the wheat from the chaff.

Therefore, investors looking to buy a piece of this action are recommended to buy either Admax Global Health Sciences fund (run and owned by Invesco funds of Canada) or the Green Line Science & Tech Fund.

From a recent research report from The Fund Counsel.