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November 22, 2018updated 28 Nov 2018 2:09pm

Wealthy entrepreneurs put their faith in tech stocks

By Oliver Williams

A bull market has caused wealthy entrepreneurs to flock to equities in the past year, with tech stocks being their favorite area of investment. This is despite recent volatility seen in the sector.

The results are from BNP Paribas’ annual Entrepreneurs Report, released on Wednesday. The fifth edition of the report saw the research firm Scorpio Partnership interview 2,763 multi-millionaire entrepreneurs in 23 countries.

For the first time in those five years, the report found that equities make up the largest portion of an average entrepreneurs’ investment portfolio, accounting for one-fifth.

Of that same portfolio, 55% was invested in technology, the study finds. While most technology investing was direct (64%), just over a third (36%) was via ETFs.

“When we say tech we aren’t just talking about FANGs [the acronym for Facebook, Amazon, Netflix and Google]. We’re talking about [technology in] all sectors: financial services, consumer and manufacturing”, commented Tasha Vashisht, a senior manager at Scorpio Partnership and author of the report.

Troubling times for tech

The news that high net worth entrepreneurs are investing in technology and equities comes after another a troubling week for the pair.

“The majority of this research was conducted in the summer at the peak of the bull market”, said Vashisht, explaining why such volatile assets were so popular.

Since October, technology stocks have seen some of their highest volatility as investors fear trade tensions between the US and China will disrupt their supply lines.

On Tuesday, the Nasdaq Composite fell to its lowest level since April 4th, largely due to sell-offs of FANG shares. Another tech stock not included in the acronym – Apple – has also seen its share price fall as iPhones sales fall. Its shares are down 20% from its all-time high.

However, wealthy investors should take a long-term perspective says Florent Bronès, chief investment officer for BNP Paribas Wealth Management.

“At the moment we are neutral in technologies. You have good results, bad results. But technology will continue to be part of our lives, no matter what”, said Bronès at the report’s launch in Paris on Wednesday.

“If in the long term you want returns you have to choose risky assets. We stick to the fundamentals. We know in the short term we have volatility.

“For the moment the bull market is still going on. We agree with the entrepreneur about taking risks. We agree that the corporate sector is the place for the moment.”

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