'For a long time we've been bullish on tech stocks, but that has changed. We do not see a tech bubble, even if the performance and rating look like a bubble. Company earnings have grown strongly and sometimes justify the valuations,' said Magnatantini.
While Magnatantini is still overweight on tech stocks overall, he recently cut Tencent out of the portfolio, while reducing exposure to Alibaba and Facebook. Instead he’s focusing on more defensive titles in the IT sector, such as DXC Technologies.
He said the biggest risks arise from increasing regulation, the tech sector exploiting tax loopholes, and industry competition.
He said: 'We are in the midst of a real arms race between IT companies. Meanwhile, the costs of research and development are exploding, while future profits are by definition uncertain.'
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