Why Vestact is bullish on tech

Tech stocks have been soaring in recent days, with a remarkable rally of almost 16 per cent on the S&P 500 this year. Analysts have reported that major tech companies will continue to rally as investors remain insulated from the worst effects of the Covid-19 market crisis. Byron Lotter, Portfolio Manager at Vestact, joined CNBC Africa to share his insights on the impact of the tech rally on their returns, the sustainability of the current tech rally, and the risks and opportunities in the tech sector. Vestact has been pleased with the performance of their tech-heavy portfolio amidst the current rally. Lotter explained that while tech stocks were once considered speculative, many tech companies now possess strong balance sheets, resilient business models, and substantial cash reserves, making them a safe haven for investors. Despite the uncertainties caused by the pandemic, Vestact's portfolio has seen a 13-14% increase this year. Lotter emphasized that the surge in tech stock prices is not reminiscent of the dot-com bubble in 2000, as the current landscape is vastly different and tech companies are profiting more than ever before. As the world becomes increasingly reliant on tech-based products and services, tech companies are reaping the benefits of heightened demand. In particular, Tesla has captured significant attention with its recent market value surpassing that of traditional automotive players. Lotter acknowledged the volatility in Tesla's stock price but expressed optimism about Tesla's long-term potential to dominate the EV market, drawing parallels to Apple's success in the smartphone industry. Despite concerns about Tesla's valuation, Lotter believes that the company could potentially become a trillion-dollar business if it capitalizes on its first-mover advantage and brand quality. While regulatory risks loom over the tech sector, Lotter remains bullish on tech stocks, emphasizing the long-term viability of companies like Apple, Microsoft, Amazon, and Facebook. Lotter believes that the shift towards online services and e-commerce during the pandemic will persist even after lockdown restrictions are lifted, creating enduring demand for tech products and services. He pointed out that regulatory concerns are inevitable given the immense influence and user base of tech giants, but suggested that potential regulatory actions could lead to value creation for investors. Lotter concluded that despite some fluctuations, tech stocks present attractive investment opportunities for patient, long-term investors.