The £719.8m Polar Capital Technology Trust has recorded an 18.7 per cent increase in its total net assets for the six months to October 31.
In its half yearly results the investment trust, which is managed by Ben Rogoff, also reported a total return performance figure of 18.7 per cent on a net asset value (NAV) per share basis, compared with a 16.3 per cent return for the Dow Jones World Technology index sterling adjusted benchmark.
The manager attributed the outperformance to a “sharp rebound in a number of our high growth stocks, such as LinkedIn, Splunk and Tableau”.
He added: “The trust also benefited from underweight/zero positions in a number of legacy companies that underperformed during the period including Canon, Oracle, SAP and Samsung. The most significant of these incumbent laggards was IBM, our zero weighting (as compared to an average index weighting of around 4 per cent) providing a welcome boost to relative performance.”
Other contributors to performance included M&A activity in the technology sector, with one of the trust’s holdings – Concur Technology – having been acquired “at a healthy premium”.
However, the manager acknowledged the trust had faced some Style-related headwinds as smaller stocks continued to trail their large cap peers. In addition Mr Rogoff noted the trust’s underweight position in Apple and the decision to retain some liquidity in the portfolio generated some “relative underperformance”.
Looking ahead, the manager stated the team is hopeful the “the combination of earnings growth and modest revaluation of risk assets should continue to drive equity market returns”. The expected continuation of M&A activity in the sector was also identified as a potential boost and help support equity valuations.
But he added: “While we remain constructive on markets, we expect our bullish prognosis to be further tested over the coming months/years because equity valuations and the duration of the bull market already exceed long-term averages.
“These challenges are likely to take the form of “growth scares” and will tend to occur when equity markets and investor sentiment are extended, as was the case in September/October. While we do not expect a significant setback, a number of our preferred indicators (implied volatility, investor sentiment) are suggestive of less favourable near-term risk reward. As such, we have retained a little more liquidity than usual which we will look to invest on market weakness and/or once growth headwinds associated with the resurgent US dollar appear more fully appreciated by investors.”
