We Welcome a Tech Fund to the Kip 25

T. Rowe Price Global Technology sees promise in smaller tech companies leading changes to consumer services.

technology concept
(Image credit: Getty Images)

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 (opens in new tab)), after a torrid recent run, closed in August.

When we looked for a replacement, we decided to shift things a bit. The Kip 25 roster was left with five funds that focus on small and midsize companies, but it lacked one that focuses on technology, a fast-growing sector. That’s why we're adding T. Rowe Price Global Technology (PRGTX (opens in new tab), $31.62) to the Kip 25.

Manager Alan Tu, who hunts all over the world for high-quality companies of any size, isn’t afraid to go his own way. He doesn't own Alphabet (GOOGL (opens in new tab)), Apple (AAPL (opens in new tab)) or Microsoft (MSFT (opens in new tab)), for example. The fund's top holdings – Korea-based internet platform Sea Limited (SE (opens in new tab)), software firm Atlassian (TEAM (opens in new tab)) and Zoom Video Communications (ZM (opens in new tab)) – are smaller by market value.

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"We're not bearish on the mega-cap companies," says Tu. But he sees promise in smaller ones. "We're early in this digital transformation era. A lot of the trends driving growth are accelerating, creating opportunities."

Software as a service, for example, is entering a new phase. Instead of going after big companies to sign long-term contracts – Atlassian is going straight to the consumer. Social media companies are evolving into e-commerce sites: Facebook users can buy certain wares directly on the platform. And the pandemic may have changed grocery shopping forever. That’s why Tu likes Grab, Southeast Asia's version of Uber Technologies (UBER (opens in new tab)) and DoorDash (DASH (opens in new tab)); he also has a stake in private grocery delivery service Instacart.

Earlier this year, Tu exited Chinese tech giants Alibaba Group (BABA (opens in new tab)) and Tencent Holdings (TCEHY (opens in new tab)), which are reeling from regulatory crackdowns. "We avoided a lot of carnage," he says. But the curbs aren’t a "deathblow," he adds, so those stocks may find a place in the fund again soon.

Tu is relatively new; he stepped in as manager in March 2019. But he has been a Price analyst since 2013, mostly for Global Technology, and he has the heft of Price’s analyst bench behind him. Since he took over, the fund has gained an annualized 42.4%, beating 83% of his peers.

Nellie S. Huang
Senior Associate Editor, Kiplinger's Personal Finance

Nellie joined Kiplinger in August 2011 after a seven-year stint in Hong Kong. There, she worked for the Wall Street Journal Asia, where as lifestyle editor, she launched and edited Scene Asia, an online guide to food, wine, entertainment and the arts in Asia. Prior to that, she was an editor at Weekend Journal, the Friday lifestyle section of the Wall Street Journal Asia. Kiplinger isn't Nellie's first foray into personal finance: She has also worked at SmartMoney (rising from fact-checker to senior writer), and she was a senior editor at Money.