The $5 billion planned initial public offering of social media giant Facebook may set some commentators talking about a “bubble,” but valuations among technology-based investment funds do not yet bear out these fears, figures show.

The web-based business led by chief executive Mark Zuckerberg could – according to some reports – raise as much as $10 billion from the flotation of its shares. Zuckerberg, whose youth and sartorial scruffiness is almost a parody of a typical north Californian technology entrepreneur, will control 56.9 per cent of the voting shares of a firm that is expected to be worth up to $100 billion when it goes public.

Such valuations, driven by the promise of vast advertising revenue and the site’s uses as a marketing and data tool, might set alarm bells ringing for those who recall some of the stock market surges that occurred in the late 1990s, which ended in a crash.

But the Association of Investment Companies, which represents funds such as investment trusts, says technology funds of the sort that might eventually hold Facebook shares are not showing signs of overvaluation. The average share price discount to net asset value on these UK-listed closed-ended vehicles was 9.8 per cent at the end of last year. One such vehicle, the Herald Investment Trust, had a discount to NAV of 19.32; the Polar Capital Technology Trust had a discount of 5.5 per cent and the RCM Technology Trust had a discount of 10.31 per cent, according to the AIC data. (Figures were taken from 31 December, 2011).

More generally, the technology sector is likely to grow steadily over coming years but is unlikely to rise at multiples of GDP growth as in the 1990s, according to the Polar Capital Technology Trust in its 2011 report.

“Indeed, leading IT expert Gartner expects technology spending to increase by 5.6 per cent in 2011 and enjoy a 4.8 per cent compound annual growth rate between 2010 and 2015. These modest expectations reflect both the deflationary impact of a new technology cycle and the ongoing efforts by IT managers to reduce the cost of supporting existing IT assets which will likely result in further intensification of competition between today’s incumbents,” it said.

The trust argued that the technology sector forward price-to-earnings ratio has fallen over the past year and stocks now trade around 14 times forecast next twelve-month earnings.

The Facebook IPO prompted upbeat comments from Philip Pearson, co-manager of the GLG Technology Equity Fund.

“We will be looking to participate in the IPO and already effectively have a stake through our holding in Mail.ru, a publicly-listed Russian social network whose stake in Facebook is worth around a third of its market cap,” Pearson said.

“The debate about the value of Facebook tends to focus on short-term user trends, revenues and earnings but fails to spot the key attraction. That is the fact that, to an advertiser, the price you pay 'per eyeball' on Facebook (or just as importantly on display ads where you are logged in to your Facebook account) is roughly a tenth of the price you pay for that eyeball on TV ads,” he said.

“This appears to be way too low when you consider how much more you know about the Facebook user than you know about the demographic watching a TV show. As this price gap collapses, we should see dramatic growth in Facebook's revenue and much of this will drop through to the bottom line. When you model that through, even at $100 billion Facebook looks significantly under-valued,” he said.