A leading UK-based technology fund manager has warned of signs of ‘exuberance’ emerging in parts of the investment market.

Ben Rogoff, who runs the Polar Capital Global Technology Fund (B42W4J8) and Polar Capital Technology Trust (PCT), flagged the wave of new stock market listings and blank cheque acquisition vehicles, cryptocurrencies and NFTs (non-fungible tokens) among several features of today’s market that are ‘beginning to rhyme a little more’ with the massive market correction of two decades ago.

According to Renaissance Capital, 2021 will see a record 875 initial public offerings, including 500 SPAC deals, raising $250 billion. This year’s IPO boom will smash the previous record set in 2000 when 406 companies raised $93 billion.

Another major factor likely to drive market returns is the fate of the mega cap technology companies. Apple, Amazon, Microsoft, Alphabet and Facebook now represent a combined market value of around $9 trillion, illustrating their dominance in the market.

Despite these ‘amber flags’ Rogoff remains constructive about the technology sector and its medium-term prospects and says that the current 30% technology sector premium to the broader market is ‘about normal’.

According to the fund manager’s calculations, the technology sector’s forward price to earnings multiple of around 27.5 remains far from levels seen during the late 1990s bubble when the sector traded out more than twice the market multiple. The S&P 500 currently trades on about 21 times forward earnings.

DISCLAIMER: The author owns shares in Polar Capital Technology Trust

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