This year has been a brutal one for investors of tech shares in the S&P/ASX 200 Index (ASX: XJO).
Not so long ago, companies in the information technology space were the darlings of the Australian share market. The allure of potentially far superior returns (even multibaggers) within the space attracted new investors hand over fist. In turn, we witnessed the creation of the ‘WAAAX‘ shares and a new ASX index known as the S&P/ASX All Technology Index (ASX: XTX).
However, the tides shifted throughout this year as fears of higher interest rates strained valuations of ASX 200 tech shares. To put it into perspective, only two of the five WAAAX shares have posted a positive return this year.
Despite a fruitless 2021, could the tech sector be the recipient of some affection next year?
Fund managers hone in on tech shares for 2022
If the Sohn Hearts & Minds Investment Conference earlier this month was anything to go by, fund managers are locking onto the unloved sector. Nearly two-thirds of the 13 stock picks at the conference fell into the tech category. Though only one pure tech play featured in the list was a constituent of the ASX 200.
The one ASX 200 tech share making the cut was multi-cloud connectivity provider, Megaport Ltd (ASX: MP1). Unlike many other ASX-listed tech shares, the company founded by Bevan Slattery managed to outperform the benchmark index this year — rising 28.5%.
However, investing great Charlie Munger delivered a shot across the bow to investors at the conference. The other half of the iconic duo at Berkshire Hathaway warned that valuations still looked crazier than in the dotcom era. A broad market rally has Munger believing equities are expensive, especially for ‘great’ companies.
ASX 200 tech shares experts are keeping an eye on
Let’s take a quick look at a couple of ASX 200 tech shares that have made it onto the experts’ ‘good’ list coming up to Christmas.
The first company that could be looking attractive as we head into 2022 is Life360 Inc (ASX: 360). The family safety app provider is a buy for Tribeca Investment Partners’ Jun Bei Liu and Market Matters’ James Gerrish. A combination of high organic growth and reasonable valuation has this tech company ripe for the picking in the eyes of these experts.
Another ASX 200 tech share that has investors intrigued coming up to the end of the year is Tyro Payments Ltd (ASX: TYR). The payments solution company is a buy for Gerrish — looking out 12 months from now, the fund manager reckons total transaction value should increase ‘very strongly’.