Technological breakthroughs

However, the advent of social media in particular has led to a renewed interest in technology. In the UK, firms such as Google, Apple and Groupon have recently signed leases for new premises in London for their expansion.

There are currently only two closed-end products that sit in the AIC Sector Specialist: TMT sector, the £453m Polar Capital Technology trust and the £83m RCM Technology trust. The £501.3m Herald investment trust, listed in AIC Sector Specialist: Small Media Communications & IT Companies sector, also has a technology-focused remit.

The investment objective of the Polar Capital Technology trust is to maximise capital growth for shareholders through a diversified portfolio of technology companies.

This includes areas as diverse as information, media, communications, environmental, healthcare and renewable energy, as well as computing and associated industries.

Polar Capital technology manager Ben Rogoff says: “The key risk of investing in emerging technologies, such as the social media space, is that the pace of innovation in the technology sector is accelerating. Facebook has cleared the most difficult hurdle in that it now has huge barriers to entry with its network of more than 1bn users globally, but they need to keep innovating to maintain this position. They have also eliminated most of the competition, with Google+ faltering and early competitors such as MySpace, Bebo and Friends Reunited now too small to be relevant.

“That said, Facebook is not alone, and we believe LinkedIn and Sina (a leading Chinese portal which is gaining significant traction with Sina Weibo, a hybrid business combining elements of both Twitter and Facebook) have also reached sufficient scale for it to be tough for new entrants to compete.”

Mr Rogoff adds: “Technology valuations are generally very compelling and the sector looks well placed to outperform in 2012. However, to date, we have taken a conservative approach regarding social media – largely because the number of social media related initial public offerings (IPOs) has been limited and the free float in each has been constrained to ensure the flotations are successful.

“That said, we currently have small positions in both LinkedIn and Sina and we would expect both to benefit from a rerating around a successful Facebook IPO.”

Unlike the Polar Capital Tech-nology trust, which has a 64 per cent allocation to the US market, the RCM Technology trust has 80 per cent of its portfolio in the region.

According to manager Walter Price, the US is not an “ageing” country that is destined for slow growth and limited potential, but instead there are powerful demographic trends led by a younger generation that bode well for long-term economic growth and opportunities