The fund is trading on nearly twice its average discount to NAV
Thursday 11 Jul 2019 Author: Steven Frazer

The world is changing at its fastest pace than at any time in history and technology shifts and developments sit smack bang at the heart of this transformation.

Technology is everywhere and there are market beating returns to be had from investing in the space, even for the more cautious investor. This is where an expert team can help and Ben Rogoff has been running the Polar Capital Technology Trust (PCT) for getting on for two decades.

His track record speaks volumes about his market savvy. Over the past five years he has overseen a 185% increase in net asset value (NAV), beating his chosen Dow Jones World Technology benchmark by more than a fifth. Up to the end of 2018 the trust’s 10 year NAV performance was 551%, ahead of the benchmark’s 423% return.

You won’t be surprised to find most of the world’s largest and best known companies, including Google parent Alphabet, Microsoft and Apple as the three biggest holdings. Being ‘benchmark aware’ means some very large technology stocks simply must be owned.

But what we really like about Rogoff is his willingness to adapt the portfolio as circumstances change and new opportunities emerge. This is brilliantly illustrated in how Polar Capital Technology has slashed exposure to Facebook as it became embroiled in scandal over consumer privacy pressure.

Similarly, Microsoft has been increasingly backed as its cloud computing and artificial intelligence engine opportunity has stood out. Rogoff has also invested in some of the big Chinese technology growth stocks, such as Alibaba and Tencent, both in the portfolio’s top 10 stakes.

But there are plenty of overweight holdings (meaning they are a higher proportion of the trust than in the benchmark) that are less widely known. These include chip maker Advanced Micro Devices and software stocks like Alteryx, Twilio, New Relic and Hubspot that tap into many of his core technology themes, such as cloud computing, complex microchips, artificial intelligence, automation and disruption.

Many of these terms have become part of everyday conversation and even the most traditional of businesses, organisations and people are being touched by the tech bug.

The past year has seen some extreme spells of volatility in technology markets widening the trust’s discount to NAV which currently stands at 8.9% versus a 4.8% average discount over the past 12 months.

Even so, Rogoff remains as chipper about the long-run prospects for select technology themes as ever. We believe this makes the Polar Capital Technology Trust an excellent long-run value creation investment option.

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