Focus on businesses with entry barriers

STUART O’GORMAN Henderson Global Investors www.henderson.com

Stuart O’Gorman has worked in the investment industry since 1996, firstly for Aegon Asset Management and then for Henderson Global Investors. He manages the Henderson Horizon Global Technology Fund.*

What is your investment approach?

This is a bottom-up technology fund with a preference for businesses with strong barriers to entry, which causes us to be heavily biased towards North America. So many technology products come out and don’t make any money. So not only do we look at whether the technology works when valuing a company but we focus on how sustainable the business’s barriers to entry are.

If you look at the technology sector, it’s dominated by a few companies that have managed to build a big wall round their business. We need to find those businesses like Apple, Cisco or Oracle. We don’t invest in start- ups as the company needs to be quoted on a stock market for us to invest in it.

How has your fund performed?

Over the last five years, the Henderson Horizon Global Technology Fund has been in the top quartile of its peer grouping every single year. In the five years to the end of April 2010, the fund has delivered a gross return of 52.2 per cent, compared to the benchmark index return of 33.7 per cent. The fund’s gross return for the last three years is 15.8 per cent, compared to the index return of 4.5 per cent.

What is your outlook?

I think the problem is still the horrible imbalance in the global economy. We have a bubble in China, a meltdown in Ireland and Greece, and America is somewhere in between.

There are still a lot of macro risks, so we’re not taking a big bet one way or the other on the economy. We’re really just looking for businesses with recurring cashflows that can outperform in both rising and falling economic growth.

*In Ireland this fund is provided exclusively through RaboDirect.ie

In conversation with Caroline Madden