Performance of technology sector funds over turbulent market periods

Technology sector funds, whose objective is investment in the technology industry, have experienced historic growth and dramatic decline from the end of the 1990s to the beginning of the 2000s. This paper examines the performance of 140 technology funds including the selectivity skill and timing ability of technology sector fund managers during turbulent market periods, particularly from 1998 to 2001. This paper finds that technology sector funds have managed to achieve abnormal returns through the fund managers' timing ability against the entire market. Also, it is found that technology fund managers have little selectivity and timing ability against the IT market, which is inconsistent with the findings of previous literature claiming that fund managers normally have positive selectivity but negative timing ability. These results suggest that technology fund managers have limitation in selecting stocks in a particular sector and the poor skill to cope with a rapidly changing corresponding market.