Last updated {{time}} {{Date}}
2. Source: Lipper. As at market close.
This site uses cookies. By continuing to browse the site you are agreeing to our cookie policy.
Last updated {{time}} {{Date}}
2. Source: Lipper. As at market close.
As artificial intelligence becomes mainstream, the pace of disruption is accelerating.
As one of the largest, most experienced technology investment teams in Europe, we have deep experience in identifying trends early. As these transformative innovations are rapidly adopted, we are embracing the opportunities this brings to the technology sector and the wider world.
Past performance is not a reliable indicator of future returns.
The breakthrough in Artificial Intelligence represents one of the most exciting developments in technology yet. We believe this is akin to the commercialisation of the internet; smartphones; and the launch of the cloud.
Technology has become a pervasive and integral force in our everyday lives and there are a number of secular trends driving long-term growth in the sector. PCT seeks to benefit from this by investing across several core, multi-decade technology themes:
Our approach aims to cut through the hype which often can be found within the technology sector, and lead to unjustified valuations and elevated levels of risk. We have a highly disciplined, conservative approach that – in a high growth sector – differentiates the portfolio from its peers.
We look for technology companies playing on structural, secular trends and that offer genuine long-term growth potential. These technology companies will be the primary beneficiaries as the sector continues to capture an ever-higher proportion of global GDP, disrupt industries, and transform business models.
Managed by an expert team of dedicated technology specialists, PCT has an impressive long-term track record, built on the managers ability to identify emerging technology trends and invest with conviction in those companies best placed to exploit them.
Cumulative performance (%) | 1 year | 3 years | 5 years | 10 years |
---|---|---|---|---|
Ordinary Share Price (TR) | 50.52 | 12.58 | 135.05 | 427.44 |
NAV per Share (TR) | 45.85 | 20.14 | 145.37 | 494.49 |
Benchmark | 48.10 | 39.65 | 174.52 | 531.34 |
Discrete performance (%) | 30.12.22 29.12.23 | 31.12.21 30.12.22 | 31.12.20 31.12.21 | 31.12.19 31.12.20 | 31.12.18 31.12.19 |
---|---|---|---|---|---|
Ordinary Share Price (TR) | 50.52 | -36.80 | 18.35 | 45.33 | 43.66 |
NAV per Share (TR) | 45.85 | -30.50 | 18.52 | 52.39 | 34.02 |
Benchmark | 48.10 | -26.44 | 28.18 | 41.60 | 38.83 |
Data as at 29 December 2023.
Past performance is not indicative or a guarantee of future results. Source: Bloomberg & HSBC Securities Services (UK) Limited, percentage growth, Net of Fees in GBP terms. Benchmark index used is the Dow Jones Global Technology Index (Total Return). More information on performance can be found in the Share Price & Performance tab.
Data as at 29 February 2024
Source: Bloomberg & HSBC Securities Services (UK) Limited, percentage growth, Net of Fees in GBP terms. Past performance is not indicative or a guarantee of future results. Benchmark index used is the Dow Jones Global Technology Index (Total Return). More information on performance can be found in the Share Price & Performance tab.
Important Information: This website is provided for the sole use of the intended recipient and is not a financial promotion. It shall not and does not constitute an offer or solicitation of an offer to make an investment into any Fund or Company managed by Polar Capital. It may not be reproduced in any form without the express permission of Polar Capital. The law restricts distribution of this document in certain jurisdictions; therefore, it is the responsibility of the reader to inform themselves about and observe any such restrictions. It is the responsibility of any person/s in possession of this document to inform themselves of, and to observe, all applicable laws and regulations of any relevant jurisdiction. Polar Capital Technology Trust plc is an investment company with investment trust status and as such its ordinary and subscription shares are excluded from the FCA’s (Financial Conduct Authority’s) restrictions which apply to non-mainstream investment products. The Company conducts its affairs and intends to continue to do so for the foreseeable future so that the exclusion continues to apply. Subscription shares will have a dilutive effect on ordinary shares when the net asset value (NAV) is greater than the conversion price.
It is not designed to contain information material to an investor’s decision to invest in Polar Capital Technology Trust plc, an Alternative Investment Fund under the Alternative Investment Fund Managers Directive 2011/61/EU (“AIFMD”) managed by Polar Capital LLP the appointed Alternative Investment Manager. In relation to each member state of the EEA (each a “Member State”) which has implemented the AIFMD, this document may only be distributed and shares may only be offered or placed in a Member State to the extent that (1) the Fund is permitted to be marketed to professional investors in the relevant Member State in accordance with AIFMD; or (2) this document may otherwise be lawfully distributed and the shares may otherwise be lawfully offered or placed in that Member State (including at the initiative of the investor). As at the date of this document,the Company has not been approved, notified or registered in accordance with the AIFMD for marketing to professional investors in any member state of the EEA. However, such approval may be sought or such notification or registration may be made in the future. Therefore this website is only transmitted to an investor in an EEA Member State at such investor’s own initiative. SUCH INFORMATION, INCLUDING RELEVANT RISK FACTORS, IS CONTAINED IN THE COMPANY’S OFFER DOCUMENT WHICH MUST BE READ BY ANY PROSPECTIVE INVESTOR.
Third-party Data: Some information contained herein has been obtained from third party sources and has not been independently verified by Polar Capital. Neither Polar Capital nor any other party involved in or related to compiling, computing or creating the data makes any express or implied warranties or representations with respect to such data (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability or fitness for a particular purpose with respect to any data contained herein.
Information Subject to Change: The information contained herein is subject to change, without notice, at the discretion of Polar Capital and Polar Capital does not undertake to revise or update this information in any way.
Benchmarks: The following benchmark index is used: Dow Jones Global Technology Index (Total Return). This benchmark is generally considered to be representative of the Technology Equity universe. This benchmark is a broad-based index which is used for comparative/illustrative purposes only and has been selected as it is well known and is easily recognizable by investors. Please refer to www.djindexes.com for further information on this index. Comparisons to benchmarks have limitations as benchmarks volatility and other material characteristics that may differ from the Company. Security holdings, industry weightings and asset allocation made for the Company may differ significantly from the benchmark. Accordingly, investment results and volatility of the Company may differ from those of the benchmark. The indices noted in this document are unmanaged, are unavailable for direct investment, and are not subject to management fees, transaction costs or other types of expenses that the Company may incur. The performance of the indices reflects reinvestment of dividends and, where applicable, capital gain distributions. Therefore, investors should carefully consider these limitations and differences when evaluating the comparative benchmark data performance. Information regarding indices is included merely to show general trends in the periods indicated, it is not intended to imply that the Fund was similar to the indices in composition or risk. The benchmark used to calculate the performance fee is provided by an administrator on the ESMA register of benchmarks which includes details of all authorised, registered, recognised and endorsed EU and third country benchmark administrators together with their national competent authorities.
Performance/Investment Process/Risk: Performance is shown net of fees and expenses and includes the reinvestment of dividends and capital gain distributions. Factors affecting the Company’s performance may include changes in market conditions (including currency risk) and interest rates and in response to other economic, political, or financial developments. The Company’s investment policy allows for it to enter into derivatives contracts. Leverage may be generated through the use of such financial instruments and investors must be aware that the use of derivatives may expose the Company to greater risks, including, but not limited to, unanticipated market developments and risks of illiquidity, and is not suitable for all investors. Those in possession of this document must read the Company’s Investment Policy and Annual Report for further information on the use of derivatives. Past performance is not a guide to or indicative of future results. Future returns or income are not guaranteed and a loss of principal may occur. Investments are not insured by the FDIC (or any other state or federal agency), or guaranteed by any bank, and may lose value. No investment process or strategy is free of risk and there is no guarantee that the investment process or strategy described herein will be profitable.
Country Specific disclaimers: The Company has not been and will not be registered under the U.S. Investment Company Act of 1940, as amended (the "Investment Company Act") and the holders of its shares will not be entitled to the benefits of the Investment Company Act. In addition, the offer and sale of the Securities have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"). No Securities may be offered or sold or otherwise transacted within the United States or to, or for the account or benefit of U.S. Persons (as defined in Regulation S of the Securities Act). In connection with the transaction referred to in this document the shares of the Fund will be offered and sold only outside the United States to, and for the account or benefit of non U.S. Persons in "offshore- transactions" within the meaning of, and in reliance on the exemption from registration provided by Regulation S under the Securities Act. No money, securities or other consideration is being solicited and, if sent in response to the information contained herein, will not be accepted. Any failure to comply with the above restrictions may constitute a violation of such securities laws.
Last updated {{time}} {{Date}}
2. Source: Lipper. As at market close.
The global pandemic has shown the modern world is built on technology. Trends we have witnessed and written about for many years have accelerated during the crisis, and many will remain as the crisis recedes. Polar Capital Technology Trust plc provides investors access to this enormous, fast-evolving potential.
Managed by a team of dedicated technology specialists, PCT is a leading investment trust with a multi-year track record – a result of the managers’ active approach and their ability to not only identify developing technology trends early on but to invest with conviction in those companies best placed to exploit them.
Past performance is not a reliable indicator of future returns.
The Company aims to maximise long-term capital growth through investing in a diversified portfolio of technology companies around the world.
At the Annual General Meeting in 2012 shareholder approval was obtained for a simplified investment policy. This did not change the investment objective but provides a clear and appropriate set of up to date investment restrictions in line with the Financial Conduct Authority and HM Revenue and Customs current requirements. The portfolio was managed under and in accordance with the old policy and restrictions in the year to 30 April 2012 and up to 4 September 2012 when the change was approved by shareholders.
Asset allocation
Technology may be defined as the application of scientific knowledge for practical purposes and technology companies are defined accordingly. While this offers a very broad and dynamic investing universe and covers many different companies, the portfolio of the Company (the “Portfolio”) is focused on companies which use technology or which develop and supply technological solutions as a core part of their business models. This includes areas as diverse as information, media, communications, environmental, healthcare, finance, e-commerce and renewable energy, as well as the more obvious applications such as computing and associated industries.
The Board has agreed a set of parameters which seek to ensure that investment risk is spread and diversified. The Board believes that this provides the necessary flexibility for the Investment Manager to pursue the investment objective, given the dynamic and rapid changes in the field of technology, while maintaining a spread of investments.
The Company uses the Dow Jones Global Technology Index (total return, Sterling adjusted, with the removal of relevant withholding taxes) as the Benchmark against which Net Asset Value (NAV) performance is measured for the purpose of assessing performance fees. From 1 May 2013 the benchmark was calculated using a net basis which adjusts the Benchmark income element to reflect withholding taxes which would be suffered by a UK based investor.
However, the Benchmark is neither a target nor an ideal investment strategy. The purpose of the Benchmark is to set a reasonable return for shareholders of PCT above which the Investment Manager is entitled to a share of the extra performance it has delivered.
Risk diversification
PCT will at all times invest and manage its assets in a manner that is consistent with spreading investment risk and invests in a Portfolio comprised primarily of international quoted equities which is diversified across both regions and sectors. PCT will satisfy the following investment restrictions:
In addition to the restrictions set out above, PCT is subject to Chapter 15 of the UK Listing Authority’s Listing Rules which apply to closed-ended investment companies with a premium listing on the Official List of the London Stock Exchange. In order to comply with the current Listing Rules, PCT will not invest more than 10 per cent. of its total assets at the time of acquisition in other listed closed-ended investment funds, whether managed by the Investment Manager or not. This restriction does not apply to investments in closed-ended investment funds which themselves have published investment policies to invest no more than 15 per cent. of their total assets in other listed closed-ended investment funds. However, PCT will not in any case invest more than 15 per cent. of its total assets in other closed-ended investment funds. PCT must not conduct any trading activity which is significant in the context of its group as a whole.
Borrowing, Cash and Derivatives
The Company may borrow money to invest in the Portfolio over both the long and short-term. Any commitment to borrow funds is agreed by the Board and the AIFM.
The Company’s Articles of Association permit borrowings up to the amount of its paid up share capital plus capital and revenue reserves but any net borrowings in excess of 20% of the Company’s net assets at the time of drawdown will only be made with the approval of the Board.
The Investment Manager may also use from time to time derivative instruments as approved by the Board such as financial futures, options, contracts-for-difference and currency hedges. These are used for the purpose of efficient portfolio management. Any such use of derivatives will be made in accordance with PCT’s policies on spreading investment risk as set out in this investment policy and any leverage resulting from the use of such derivatives will be subject to the restrictions on borrowings set out above.
Changes to investment policy
Any material change to the investment policy will require the approval of the Shareholders by way of an ordinary resolution at a general meeting. PCT will promptly issue an announcement to inform Shareholders and the public of any change of its investment policy.
The Board monitors the portfolio’s exposure to different geographical markets, sub-sectors within technology and the spread of investments across different market capitalisations. Cyclical changes in markets and new technologies will bring certain sub-sectors or companies of a particular size or market capitalisation into or out of favour.
Market parameters
Notwithstanding the ability to invest up to 100% of the portfolio in any one market, with current and foreseeable investment conditions the Portfolio will be invested in accordance with the objective across worldwide markets within the following geographical and market parameters:
The Board has set specific upper exposure limits for certain countries where they believe there may be an elevated risk.
Cash
From time to time PCT may hold cash or near cash equivalents if the Investment Manager feels that these will at a particular time or over a period enhance the performance of the Portfolio. The management of cash is through the purchase of appropriate government bonds, money market funds or bank deposits depending on the Investment Manager’s view of the investment opportunities.
Gearing
On 30 September 2020, the Company had drawn down the two, two-year fixed rate, term loans of JPY 3.8bn and USD 36m from ING Bank N.V. Both loans fall due for repayment on 30 September 2022. The JPY loan has been fixed at an all-in rate of 0.90% pa and the USD loan has been fixed at an all-in rate of 1.1% pa. The Company has repaid the two, two-year loan facilities with ING Bank N.V of USD 23.3m and JPY 5.2bn dated 2 October 2018.
Important Information: This website is provided for the sole use of the intended recipient and is not a financial promotion. It shall not and does not constitute an offer or solicitation of an offer to make an investment into any Fund or Company managed by Polar Capital. It may not be reproduced in any form without the express permission of Polar Capital. The law restricts distribution of this document in certain jurisdictions; therefore, it is the responsibility of the reader to inform themselves about and observe any such restrictions. It is the responsibility of any person/s in possession of this document to inform themselves of, and to observe, all applicable laws and regulations of any relevant jurisdiction. Polar Capital Technology Trust plc is an investment company with investment trust status and as such its ordinary and subscription shares are excluded from the FCA’s (Financial Conduct Authority’s) restrictions which apply to non-mainstream investment products. The Company conducts its affairs and intends to continue to do so for the foreseeable future so that the exclusion continues to apply. Subscription shares will have a dilutive effect on ordinary shares when the net asset value (NAV) is greater than the conversion price.
It is not designed to contain information material to an investor’s decision to invest in Polar Capital Technology Trust plc, an Alternative Investment Fund under the Alternative Investment Fund Managers Directive 2011/61/EU (“AIFMD”) managed by Polar Capital LLP the appointed Alternative Investment Manager. In relation to each member state of the EEA (each a “Member State”) which has implemented the AIFMD, this document may only be distributed and shares may only be offered or placed in a Member State to the extent that (1) the Fund is permitted to be marketed to professional investors in the relevant Member State in accordance with AIFMD; or (2) this document may otherwise be lawfully distributed and the shares may otherwise be lawfully offered or placed in that Member State (including at the initiative of the investor). As at the date of this document,the Company has not been approved, notified or registered in accordance with the AIFMD for marketing to professional investors in any member state of the EEA. However, such approval may be sought or such notification or registration may be made in the future. Therefore this website is only transmitted to an investor in an EEA Member State at such investor’s own initiative. SUCH INFORMATION, INCLUDING RELEVANT RISK FACTORS, IS CONTAINED IN THE COMPANY’S OFFER DOCUMENT WHICH MUST BE READ BY ANY PROSPECTIVE INVESTOR.
Third-party Data: Some information contained herein has been obtained from third party sources and has not been independently verified by Polar Capital. Neither Polar Capital nor any other party involved in or related to compiling, computing or creating the data makes any express or implied warranties or representations with respect to such data (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability or fitness for a particular purpose with respect to any data contained herein.
Benchmarks: The following benchmark index is used: Dow Jones Global Technology Index (Total Return). This benchmark is generally considered to be representative of the Technology Equity universe. This benchmark is a broad-based index which is used for comparative/illustrative purposes only and has been selected as it is well known and is easily recognizable by investors. Please refer to www.djindexes.com for further information on this index. Comparisons to benchmarks have limitations as benchmarks volatility and other material characteristics that may differ from the Company. Security holdings, industry weightings and asset allocation made for the Company may differ significantly from the benchmark. Accordingly, investment results and volatility of the Company may differ from those of the benchmark. The indices noted in this document are unmanaged, are unavailable for direct investment, and are not subject to management fees, transaction costs or other types of expenses that the Company may incur. The performance of the indices reflects reinvestment of dividends and, where applicable, capital gain distributions. Therefore, investors should carefully consider these limitations and differences when evaluating the comparative benchmark data performance. Information regarding indices is included merely to show general trends in the periods indicated, it is not intended to imply that the Fund was similar to the indices in composition or risk. The benchmark used to calculate the performance fee is provided by an administrator on the ESMA register of benchmarks which includes details of all authorised, registered, recognised and endorsed EU and third country benchmark administrators together with their national competent authorities.
Information Subject to Change: The information contained herein is subject to change, without notice, at the discretion of Polar Capital and Polar Capital does not undertake to revise or update this information in any way.
Country Specific disclaimers: The Company has not been and will not be registered under the U.S. Investment Company Act of 1940, as amended (the "Investment Company Act") and the holders of its shares will not be entitled to the benefits of the Investment Company Act. In addition, the offer and sale of the Securities have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"). No Securities may be offered or sold or otherwise transacted within the United States or to, or for the account or benefit of U.S. Persons (as defined in Regulation S of the Securities Act). In connection with the transaction referred to in this document the shares of the Fund will be offered and sold only outside the United States to, and for the account or benefit of non U.S. Persons in "offshore- transactions" within the meaning of, and in reliance on the exemption from registration provided by Regulation S under the Securities Act. No money, securities or other consideration is being solicited and, if sent in response to the information contained herein, will not be accepted. Any failure to comply with the above restrictions may constitute a violation of such securities laws.
Change | {{Change}} |
---|---|
Date | {{Date}} |
Last trade time | {{time}} |
Previous close | {{RealClose}} |
Daily high | {{High}} |
---|---|
Daily low | {{Low}} |
Daily open | {{Open}} |
Daily volume | {{Volume}} |
Bid | {{Bid}} |
---|---|
Ask | {{Ask}} |
Year high | {{YearHigh}} |
Year low | {{YearLow}} |
Source: London Stock Exchange. Delayed by at least 15 minutes.
Invalid Dates
Update chart1 month | 3 month | YTD | 1 year | 3 years | 5 years | 10 years | |
---|---|---|---|---|---|---|---|
Ordinary Share Price (TR) | 7.64 | 20.67 | 11.37 | 48.82 | 32.87 | 136.89 | 494.65 |
NAV per share | 9.16 | 18.99 | 13.92 | 48.63 | 35.74 | 151.96 | 562.86 |
Benchmark | 7.24 | 14.89 | 10.65 | 49.03 | 52.92 | 177.12 | 585.77 |
Source: Bloomberg & HSBC Securities Services (UK) Limited, percentage growth, Net of Fees in GBP terms. Past performance is not indicative or a guarantee of future results.
Financial YTD | 28.02.23 29.02.24 | 28.02.22 28.02.23 | 26.02.21 28.02.22 | 28.02.20 26.02.21 | 28.02.19 28.02.20 | |
---|---|---|---|---|---|---|
Ordinary Share Price (TR) | 48.97 | 48.82 | -14.30 | 4.18 | 47.16 | 21.15 |
NAV per share | 46.37 | 48.63 | -11.38 | 3.06 | 49.69 | 24.00 |
Benchmark | 40.21 | 49.03 | -7.95 | 11.47 | 42.84 | 26.87 |
Important Information: This website is provided for the sole use of the intended recipient and is not a financial promotion. It shall not and does not constitute an offer or solicitation of an offer to make an investment into any Fund or Company managed by Polar Capital. It may not be reproduced in any form without the express permission of Polar Capital. The law restricts distribution of this document in certain jurisdictions; therefore, it is the responsibility of the reader to inform themselves about and observe any such restrictions. It is the responsibility of any person/s in possession of this document to inform themselves of, and to observe, all applicable laws and regulations of any relevant jurisdiction. Polar Capital Technology Trust plc is an investment company with investment trust status and as such its ordinary and subscription shares are excluded from the FCA’s (Financial Conduct Authority’s) restrictions which apply to non-mainstream investment products. The Company conducts its affairs and intends to continue to do so for the foreseeable future so that the exclusion continues to apply. Subscription shares will have a dilutive effect on ordinary shares when the net asset value (NAV) is greater than the conversion price.
It is not designed to contain information material to an investor’s decision to invest in Polar Capital Technology Trust plc, an Alternative Investment Fund under the Alternative Investment Fund Managers Directive 2011/61/EU (“AIFMD”) managed by Polar Capital LLP the appointed Alternative Investment Manager. In relation to each member state of the EEA (each a “Member State”) which has implemented the AIFMD, this document may only be distributed and shares may only be offered or placed in a Member State to the extent that (1) the Fund is permitted to be marketed to professional investors in the relevant Member State in accordance with AIFMD; or (2) this document may otherwise be lawfully distributed and the shares may otherwise be lawfully offered or placed in that Member State (including at the initiative of the investor). As at the date of this document,the Company has not been approved, notified or registered in accordance with the AIFMD for marketing to professional investors in any member state of the EEA. However, such approval may be sought or such notification or registration may be made in the future. Therefore this website is only transmitted to an investor in an EEA Member State at such investor’s own initiative. SUCH INFORMATION, INCLUDING RELEVANT RISK FACTORS, IS CONTAINED IN THE COMPANY’S OFFER DOCUMENT WHICH MUST BE READ BY ANY PROSPECTIVE INVESTOR.
Third-party Data: Some information contained herein has been obtained from third party sources and has not been independently verified by Polar Capital. Neither Polar Capital nor any other party involved in or related to compiling, computing or creating the data makes any express or implied warranties or representations with respect to such data (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability or fitness for a particular purpose with respect to any data contained herein.
Information Subject to Change: The information contained herein is subject to change, without notice, at the discretion of Polar Capital and Polar Capital does not undertake to revise or update this information in any way.
Benchmarks: The following benchmark index is used: Dow Jones Global Technology Index (Total Return). This benchmark is generally considered to be representative of the Technology Equity universe. This benchmark is a broad-based index which is used for comparative/illustrative purposes only and has been selected as it is well known and is easily recognizable by investors. Please refer to www.djindexes.com for further information on this index. Comparisons to benchmarks have limitations as benchmarks volatility and other material characteristics that may differ from the Company. Security holdings, industry weightings and asset allocation made for the Company may differ significantly from the benchmark. Accordingly, investment results and volatility of the Company may differ from those of the benchmark. The indices noted in this document are unmanaged, are unavailable for direct investment, and are not subject to management fees, transaction costs or other types of expenses that the Company may incur. The performance of the indices reflects reinvestment of dividends and, where applicable, capital gain distributions. Therefore, investors should carefully consider these limitations and differences when evaluating the comparative benchmark data performance. Information regarding indices is included merely to show general trends in the periods indicated, it is not intended to imply that the Fund was similar to the indices in composition or risk. The benchmark used to calculate the performance fee is provided by an administrator on the ESMA register of benchmarks which includes details of all authorised, registered, recognised and endorsed EU and third country benchmark administrators together with their national competent authorities.
Performance/Investment Process/Risk: Performance is shown net of fees and expenses and includes the reinvestment of dividends and capital gain distributions. Factors affecting the Company’s performance may include changes in market conditions (including currency risk) and interest rates and in response to other economic, political, or financial developments. The Company’s investment policy allows for it to enter into derivatives contracts. Leverage may be generated through the use of such financial instruments and investors must be aware that the use of derivatives may expose the Company to greater risks, including, but not limited to, unanticipated market developments and risks of illiquidity, and is not suitable for all investors. Those in possession of this document must read the Company’s Investment Policy and Annual Report for further information on the use of derivatives. Past performance is not a guide to or indicative of future results. Future returns or income are not guaranteed and a loss of principal may occur. Investments are not insured by the FDIC (or any other state or federal agency), or guaranteed by any bank, and may lose value. No investment process or strategy is free of risk and there is no guarantee that the investment process or strategy described herein will be profitable.
Country Specific disclaimers: The Company has not been and will not be registered under the U.S. Investment Company Act of 1940, as amended (the "Investment Company Act") and the holders of its shares will not be entitled to the benefits of the Investment Company Act. In addition, the offer and sale of the Securities have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"). No Securities may be offered or sold or otherwise transacted within the United States or to, or for the account or benefit of U.S. Persons (as defined in Regulation S of the Securities Act). In connection with the transaction referred to in this document the shares of the Fund will be offered and sold only outside the United States to, and for the account or benefit of non U.S. Persons in "offshore- transactions" within the meaning of, and in reliance on the exemption from registration provided by Regulation S under the Securities Act. No money, securities or other consideration is being solicited and, if sent in response to the information contained herein, will not be accepted. Any failure to comply with the above restrictions may constitute a violation of such securities laws.
Microsoft | 10.3 | |
NVIDIA | 9.5 | |
Meta Platforms (Facebook) | 5.6 | |
Apple | 5.4 | |
Advanced Micro Devices | 4.4 | |
Alphabet | 4.3 | |
TSMC | 2.9 | |
Amazon | 2.3 | |
ASML Holding | 2.3 | |
Broadcom | 2.0 | |
Top 10 Holdings | 49.0 | |
Rest of Portfolio | 51.0 |
Total Number of Positions 103
Semiconductors & Semiconductor Equipment | 33.0 | |
Software | 23.6 | |
Interactive Media & Services | 10.9 | |
Technology Hardware, Storage & Peripherals | 9.0 | |
IT Services | 4.0 | |
Electronic Equipment, Instruments & Components | 3.1 | |
Broadline Retail | 2.7 | |
Entertainment | 2.4 | |
Communications Equipment | 2.3 | |
Machinery | 1.3 | |
Healthcare Equipment & Supplies | 0.6 | |
Automobiles | 0.6 | |
Hotels, Restaurants & Leisure | 0.5 | |
Media | 0.5 | |
Other | 2.0 | |
Cash | 3.5 | |
Note: Totals may not sum due to rounding.
Key | GBP | |
Total Net Assets | £3985.8m | |
AIC Gearing Ratio | n/a | |
AIC Net Cash Ratio | 3.50% | |
Large Cap (>US$10bn) | 89.4 | |
Mid Cap (US$1 - 10bn) | 9.9 | |
Small Cap (<US$1bn) | 0.7 | |
Cash | 3.5 |
US & Canada | 72.2 | |
Asia Pac (ex-Japan) | 9.2 | |
Japan | 5.3 | |
Europe (ex UK) | 5.2 | |
Middle East & Africa | 3.2 | |
UK | 0.8 | |
Latin America | 0.6 | |
Cash | 3.5 | |
Important Information: This website is provided for the sole use of the intended recipient and is not a financial promotion. It shall not and does not constitute an offer or solicitation of an offer to make an investment into any Fund or Company managed by Polar Capital. It may not be reproduced in any form without the express permission of Polar Capital. The law restricts distribution of this document in certain jurisdictions; therefore, it is the responsibility of the reader to inform themselves about and observe any such restrictions. It is the responsibility of any person/s in possession of this document to inform themselves of, and to observe, all applicable laws and regulations of any relevant jurisdiction. Polar Capital Technology Trust plc is an investment company with investment trust status and as such its ordinary and subscription shares are excluded from the FCA’s (Financial Conduct Authority’s) restrictions which apply to non-mainstream investment products. The Company conducts its affairs and intends to continue to do so for the foreseeable future so that the exclusion continues to apply. Subscription shares will have a dilutive effect on ordinary shares when the net asset value (NAV) is greater than the conversion price.
It is not designed to contain information material to an investor’s decision to invest in Polar Capital Technology Trust plc, an Alternative Investment Fund under the Alternative Investment Fund Managers Directive 2011/61/EU (“AIFMD”) managed by Polar Capital LLP the appointed Alternative Investment Manager. In relation to each member state of the EEA (each a “Member State”) which has implemented the AIFMD, this document may only be distributed and shares may only be offered or placed in a Member State to the extent that (1) the Fund is permitted to be marketed to professional investors in the relevant Member State in accordance with AIFMD; or (2) this document may otherwise be lawfully distributed and the shares may otherwise be lawfully offered or placed in that Member State (including at the initiative of the investor). As at the date of this document,the Company has not been approved, notified or registered in accordance with the AIFMD for marketing to professional investors in any member state of the EEA. However, such approval may be sought or such notification or registration may be made in the future. Therefore this website is only transmitted to an investor in an EEA Member State at such investor’s own initiative. SUCH INFORMATION, INCLUDING RELEVANT RISK FACTORS, IS CONTAINED IN THE COMPANY’S OFFER DOCUMENT WHICH MUST BE READ BY ANY PROSPECTIVE INVESTOR.
Third-party Data: Some information contained herein has been obtained from third party sources and has not been independently verified by Polar Capital. Neither Polar Capital nor any other party involved in or related to compiling, computing or creating the data makes any express or implied warranties or representations with respect to such data (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability or fitness for a particular purpose with respect to any data contained herein.
Holdings: Portfolio data is “as at” the date indicated and should not be relied upon as a complete or current listing of the holdings (or top holdings) of the Company. The holdings may represent only a small percentage of the aggregate portfolio holdings, are subject to change without notice, and may not represent current or future portfolio composition. Information on particular holdings may be withheld if it is in the Company’s best interest to do so. It should not be assumed that recommendations made in future will be profitable or will equal performance of the securities in this document. A list of all recommendations made within the immediately preceding 12 months is available upon request. This document is not a recommendation to purchase or sell any particular security. It is designed to provide updated information to professional investors to enable them to monitor the Company.
Benchmarks: The following benchmark index is used: Dow Jones Global Technology Index (Total Return). This benchmark is generally considered to be representative of the Technology Equity universe. This benchmark is a broad-based index which is used for comparative/illustrative purposes only and has been selected as it is well known and is easily recognizable by investors. Please refer to www.djindexes.com for further information on this index. Comparisons to benchmarks have limitations as benchmarks volatility and other material characteristics that may differ from the Company. Security holdings, industry weightings and asset allocation made for the Company may differ significantly from the benchmark. Accordingly, investment results and volatility of the Company may differ from those of the benchmark. The indices noted in this document are unmanaged, are unavailable for direct investment, and are not subject to management fees, transaction costs or other types of expenses that the Company may incur. The performance of the indices reflects reinvestment of dividends and, where applicable, capital gain distributions. Therefore, investors should carefully consider these limitations and differences when evaluating the comparative benchmark data performance. Information regarding indices is included merely to show general trends in the periods indicated, it is not intended to imply that the Fund was similar to the indices in composition or risk. The benchmark used to calculate the performance fee is provided by an administrator on the ESMA register of benchmarks which includes details of all authorised, registered, recognised and endorsed EU and third country benchmark administrators together with their national competent authorities.
Information Subject to Change: The information contained herein is subject to change, without notice, at the discretion of Polar Capital and Polar Capital does not undertake to revise or update this information in any way.
Allocations: The strategy allocation percentages set forth in this webpage are estimates and actual percentages may vary from time-to-time. The types of investments presented herein will not always have the same comparable risks and returns. Please see the private placement memorandum or prospectus for a description of the investment allocations as well as the risks associated therewith. Please note that the Company may elect to invest assets in different investment sectors from those depicted herein, which may entail additional and/or different risks. Performance of the Company is dependent on the Investment Manager’s ability to identify and access appropriate investments, and balance assets to maximize return to the Company while minimizing its risk. The actual investments in the Company may or may not be the same or in the same proportion as those shown herein.
Country Specific disclaimers: The Company has not been and will not be registered under the U.S. Investment Company Act of 1940, as amended (the "Investment Company Act") and the holders of its shares will not be entitled to the benefits of the Investment Company Act. In addition, the offer and sale of the Securities have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"). No Securities may be offered or sold or otherwise transacted within the United States or to, or for the account or benefit of U.S. Persons (as defined in Regulation S of the Securities Act). In connection with the transaction referred to in this document the shares of the Fund will be offered and sold only outside the United States to, and for the account or benefit of non U.S. Persons in "offshore- transactions" within the meaning of, and in reliance on the exemption from registration provided by Regulation S under the Securities Act. No money, securities or other consideration is being solicited and, if sent in response to the information contained herein, will not be accepted. Any failure to comply with the above restrictions may constitute a violation of such securities laws.
Important Information: This website is provided for the sole use of the intended recipient and is not a financial promotion. It shall not and does not constitute an offer or solicitation of an offer to make an investment into any Fund or Company managed by Polar Capital. It may not be reproduced in any form without the express permission of Polar Capital. The law restricts distribution of this document in certain jurisdictions; therefore, it is the responsibility of the reader to inform themselves about and observe any such restrictions. It is the responsibility of any person/s in possession of this document to inform themselves of, and to observe, all applicable laws and regulations of any relevant jurisdiction. Polar Capital Technology Trust plc is an investment company with investment trust status and as such its ordinary and subscription shares are excluded from the FCA’s (Financial Conduct Authority’s) restrictions which apply to non-mainstream investment products. The Company conducts its affairs and intends to continue to do so for the foreseeable future so that the exclusion continues to apply. Subscription shares will have a dilutive effect on ordinary shares when the net asset value (NAV) is greater than the conversion price.
It is not designed to contain information material to an investor’s decision to invest in Polar Capital Technology Trust plc, an Alternative Investment Fund under the Alternative Investment Fund Managers Directive 2011/61/EU (“AIFMD”) managed by Polar Capital LLP the appointed Alternative Investment Manager. In relation to each member state of the EEA (each a “Member State”) which has implemented the AIFMD, this document may only be distributed and shares may only be offered or placed in a Member State to the extent that (1) the Fund is permitted to be marketed to professional investors in the relevant Member State in accordance with AIFMD; or (2) this document may otherwise be lawfully distributed and the shares may otherwise be lawfully offered or placed in that Member State (including at the initiative of the investor). As at the date of this document,the Company has not been approved, notified or registered in accordance with the AIFMD for marketing to professional investors in any member state of the EEA. However, such approval may be sought or such notification or registration may be made in the future. Therefore this website is only transmitted to an investor in an EEA Member State at such investor’s own initiative. SUCH INFORMATION, INCLUDING RELEVANT RISK FACTORS, IS CONTAINED IN THE COMPANY’S OFFER DOCUMENT WHICH MUST BE READ BY ANY PROSPECTIVE INVESTOR.
Statements/Opinions/Views: All opinions and estimates constitute the best judgment of Polar Capital as of the date hereof, but are subject to change without notice, and do not necessarily represent the views of Polar Capital. This material does not constitute legal or accounting advice; readers should contact their legal and accounting professionals for such information. All sources are Polar Capital unless otherwise stated.
Third-party Data: Some information contained herein has been obtained from third party sources and has not been independently verified by Polar Capital. Neither Polar Capital nor any other party involved in or related to compiling, computing or creating the data makes any express or implied warranties or representations with respect to such data (or the results to be obtained by the use thereof), and all such parties hereby expressly disclaim all warranties of originality, accuracy, completeness, merchantability or fitness for a particular purpose with respect to any data contained herein.
Holdings: Portfolio data is “as at” the date indicated and should not be relied upon as a complete or current listing of the holdings (or top holdings) of the Company. The holdings may represent only a small percentage of the aggregate portfolio holdings, are subject to change without notice, and may not represent current or future portfolio composition. Information on particular holdings may be withheld if it is in the Company’s best interest to do so. It should not be assumed that recommendations made in future will be profitable or will equal performance of the securities in this document. A list of all recommendations made within the immediately preceding 12 months is available upon request. This document is not a recommendation to purchase or sell any particular security. It is designed to provide updated information to professional investors to enable them to monitor the Company.
Benchmarks: The following benchmark index is used: Dow Jones Global Technology Index (Total Return). This benchmark is generally considered to be representative of the Technology Equity universe. This benchmark is a broad-based index which is used for comparative/illustrative purposes only and has been selected as it is well known and is easily recognizable by investors. Please refer to www.djindexes.com for further information on this index. Comparisons to benchmarks have limitations as benchmarks volatility and other material characteristics that may differ from the Company. Security holdings, industry weightings and asset allocation made for the Company may differ significantly from the benchmark. Accordingly, investment results and volatility of the Company may differ from those of the benchmark. The indices noted in this document are unmanaged, are unavailable for direct investment, and are not subject to management fees, transaction costs or other types of expenses that the Company may incur. The performance of the indices reflects reinvestment of dividends and, where applicable, capital gain distributions. Therefore, investors should carefully consider these limitations and differences when evaluating the comparative benchmark data performance. Information regarding indices is included merely to show general trends in the periods indicated, it is not intended to imply that the Fund was similar to the indices in composition or risk. The benchmark used to calculate the performance fee is provided by an administrator on the ESMA register of benchmarks which includes details of all authorised, registered, recognised and endorsed EU and third country benchmark administrators together with their national competent authorities.
Information Subject to Change: The information contained herein is subject to change, without notice, at the discretion of Polar Capital and Polar Capital does not undertake to revise or update this information in any way.
Forecasts: References to future returns are not promises or estimates of actual returns Polar Capital may achieve. Forecasts contained herein are for illustrative purposes only and does not constitute advice or a recommendation. Forecasts are based upon subjective estimates and assumptions about circumstances and events that have not and may not take place.
Performance/Investment Process/Risk: Performance is shown net of fees and expenses and includes the reinvestment of dividends and capital gain distributions. Factors affecting the Company’s performance may include changes in market conditions (including currency risk) and interest rates and in response to other economic, political, or financial developments. The Company’s investment policy allows for it to enter into derivatives contracts. Leverage may be generated through the use of such financial instruments and investors must be aware that the use of derivatives may expose the Company to greater risks, including, but not limited to, unanticipated market developments and risks of illiquidity, and is not suitable for all investors. Those in possession of this document must read the Company’s Investment Policy and Annual Report for further information on the use of derivatives. Past performance is not a guide to or indicative of future results. Future returns or income are not guaranteed and a loss of principal may occur. Investments are not insured by the FDIC (or any other state or federal agency), or guaranteed by any bank, and may lose value. No investment process or strategy is free of risk and there is no guarantee that the investment process or strategy described herein will be profitable.
Allocations: The strategy allocation percentages set forth in this webpage are estimates and actual percentages may vary from time-to-time. The types of investments presented herein will not always have the same comparable risks and returns. Please see the private placement memorandum or prospectus for a description of the investment allocations as well as the risks associated therewith. Please note that the Company may elect to invest assets in different investment sectors from those depicted herein, which may entail additional and/or different risks. Performance of the Company is dependent on the Investment Manager’s ability to identify and access appropriate investments, and balance assets to maximize return to the Company while minimizing its risk. The actual investments in the Company may or may not be the same or in the same proportion as those shown herein.
Country Specific disclaimers: The Company has not been and will not be registered under the U.S. Investment Company Act of 1940, as amended (the "Investment Company Act") and the holders of its shares will not be entitled to the benefits of the Investment Company Act. In addition, the offer and sale of the Securities have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"). No Securities may be offered or sold or otherwise transacted within the United States or to, or for the account or benefit of U.S. Persons (as defined in Regulation S of the Securities Act). In connection with the transaction referred to in this document the shares of the Fund will be offered and sold only outside the United States to, and for the account or benefit of non U.S. Persons in "offshore- transactions" within the meaning of, and in reliance on the exemption from registration provided by Regulation S under the Securities Act. No money, securities or other consideration is being solicited and, if sent in response to the information contained herein, will not be accepted. Any failure to comply with the above restrictions may constitute a violation of such securities laws.
ISIN | GB0004220025 |
---|---|
SEDOL | 0422002 |
London Stock Exchange | PCT |
LEI |
LEI Polar Capital LLP | 4YW3JKTZ3K1II2GVCK15 |
£0 - £2bn | 0.80% |
£2bn - £3.5bn | 0.70% |
Over £3.5bn | 0.60% |
Performance | 10% over Benchmark |
Ongoing Charges | 0.81% |
The performance fee is subject to a highwater mark and cap. Further details can be found under Corporate Documents. Ongoing charges are calculated at the latest published year end date, and exclude any performance fees.
Important Information: This website is provided for the sole use of the intended recipient and is not a financial promotion. It shall not and does not constitute an offer or solicitation of an offer to make an investment into any Fund or Company managed by Polar Capital. It may not be reproduced in any form without the express permission of Polar Capital. The law restricts distribution of this document in certain jurisdictions; therefore, it is the responsibility of the reader to inform themselves about and observe any such restrictions. It is the responsibility of any person/s in possession of this document to inform themselves of, and to observe, all applicable laws and regulations of any relevant jurisdiction. Polar Capital Technology Trust plc is an investment company with investment trust status and as such its ordinary and subscription shares are excluded from the FCA’s (Financial Conduct Authority’s) restrictions which apply to non-mainstream investment products. The Company conducts its affairs and intends to continue to do so for the foreseeable future so that the exclusion continues to apply. Subscription shares will have a dilutive effect on ordinary shares when the net asset value (NAV) is greater than the conversion price.
It is not designed to contain information material to an investor’s decision to invest in Polar Capital Technology Trust plc, an Alternative Investment Fund under the Alternative Investment Fund Managers Directive 2011/61/EU (“AIFMD”) managed by Polar Capital LLP the appointed Alternative Investment Manager. In relation to each member state of the EEA (each a “Member State”) which has implemented the AIFMD, this document may only be distributed and shares may only be offered or placed in a Member State to the extent that (1) the Fund is permitted to be marketed to professional investors in the relevant Member State in accordance with AIFMD; or (2) this document may otherwise be lawfully distributed and the shares may otherwise be lawfully offered or placed in that Member State (including at the initiative of the investor). As at the date of this document,the Company has not been approved, notified or registered in accordance with the AIFMD for marketing to professional investors in any member state of the EEA. However, such approval may be sought or such notification or registration may be made in the future. Therefore this website is only transmitted to an investor in an EEA Member State at such investor’s own initiative. SUCH INFORMATION, INCLUDING RELEVANT RISK FACTORS, IS CONTAINED IN THE COMPANY’S OFFER DOCUMENT WHICH MUST BE READ BY ANY PROSPECTIVE INVESTOR.
Information Subject to Change: The information contained herein is subject to change, without notice, at the discretion of Polar Capital and Polar Capital does not undertake to revise or update this information in any way.
Country Specific disclaimers: The Company has not been and will not be registered under the U.S. Investment Company Act of 1940, as amended (the "Investment Company Act") and the holders of its shares will not be entitled to the benefits of the Investment Company Act. In addition, the offer and sale of the Securities have not been, and will not be, registered under the U.S. Securities Act of 1933, as amended (the "Securities Act"). No Securities may be offered or sold or otherwise transacted within the United States or to, or for the account or benefit of U.S. Persons (as defined in Regulation S of the Securities Act). In connection with the transaction referred to in this document the shares of the Fund will be offered and sold only outside the United States to, and for the account or benefit of non U.S. Persons in "offshore- transactions" within the meaning of, and in reliance on the exemption from registration provided by Regulation S under the Securities Act. No money, securities or other consideration is being solicited and, if sent in response to the information contained herein, will not be accepted. Any failure to comply with the above restrictions may constitute a violation of such securities laws.
Fund Manager Commentary As at 29 February 2024
Market Review
Global equity markets continued to rally in February, the MSCI All Country World Net Total Return Index gaining +5.1%, while the S&P 500 and the DJ Euro Stoxx 600 indices returned +6.2% and +2.3% respectively (all returns are in sterling terms). The S&P 500 has delivered positive returns for 16 of the past 18 weeks, a run last seen in 1971.
Equity markets remained firm despite the challenges at New York Community Bancorp due to commercial real estate losses (which do not appear to be systemic), a higher-than-expected consumer price inflation print and uncertainty about the upcoming US election. This proved insufficient to derail the prevailing bullish narrative that the disinflation process remains on track with a soft landing (where inflation moderates without a severe increase in unemployment) a likely outcome, while the economy may be entering a period of higher productivity growth.
The US economy added 353,000 jobs in January, above forecasts of 180,000 and up from an average of 255,000 jobs per month in 2023, signalling that the labour market remains tight. The largest employment gains occurred in professional and business services, health care, retail trade and social assistance, with strength broader than recent months. Average hourly earnings rose +4.5% year-on-year (y/y) which helped push the 10-year Treasury yield higher by around 35 basis points to 4.25% during the month.
The US Consumer Price Index (CPI) annual inflation rate was +3.1% year-on-year (y/y), decelerating from +3.4% y/y in December but higher than forecasts of +2.9% y/y. Core CPI, which excludes volatile items such as food and energy, was steady at +3.9% y/y, a two-and-a-half year low. Personal Consumer Expenditure (PCE; the Fed’s preferred measure) was in line with expectations against fears of a strong print, but still increased to +2.5% from below 2% in December on a six-month annualised basis.
The minutes from the January Federal Open Market Committee (FOMC) meeting reiterated that Federal Reserve (Fed) officials see significant progress in bringing down inflation, but most “noted the risks of moving too quickly to ease the stance of policy” and “emphasised the importance of carefully assessing incoming data in judging whether inflation is moving down sustainably to 2%”. More confirmation that disinflation is becoming entrenched will be required before the Fed cuts rates, or prepare the ground for a decision in May to slow the pace of quantitative tightening (QT).
Geopolitical risks remain elevated as Houthi rebels continued to attack ships in the Red Sea; Brent crude oil prices increased a further +2% during the month. More encouragingly though, our view of moderating inflation and solid economic growth remains intact which ought to be supportive for the technology sector outlook. Our recent meetings with company management teams suggest this stable IT spending outlook with strong AI demand tailwinds remains in place.
Technology review
The technology sector outperformed the broader market in February; the Dow Jones Global Technology Net Total Return Index rising +7.2%. Much of the relative outperformance of the sector was driven by the robust performance of AI-exposed companies, due to almost universally strong data points on demand/adoption and future capex during recent results.
Encouragingly, participation has broadened well beyond bellwether NVIDIA (which is now approaching 10% of the Dow Jones Global Technology Index and therefore also hitting UCITS limits), which has provided a welcome opportunity to add value through stock selection. NVIDIA’s strong performance underpinned robust absolute sector performance but large-cap technology stocks were outperformed by their small and mid-cap peers; the Russell 1000 Technology Index (large cap) and the Russell 2000 Technology Index (small cap) returning +7.6% and +9.8% respectively.
The Trust’s relative performance also benefited from its underweight positions in Apple (u/w), which is being impacted by competition in China, app store regulation and an uncertain generative AI (GenAI) strategy. We have reduced the Trust’s Apple position substantially for now. Microsoft (u/w) also lagged slightly, pausing for breath after a strong run, despite delivering solid results. This was partially offset by Meta Platforms (Facebook) (u/w) which delivered a strong earnings report with improved advertising spending in key segments (e-commerce, consumer packaged goods and gaming) supported by tailwinds from earlier AI investments.
Given the pace of the AI infrastructure buildout, the Philadelphia Semiconductor Index (SOX) led, returning +11.9%, while the NASDAQ Internet Index and Bloomberg Americas Software Index returned +7.3% and +4.1% respectively.
NVIDIA delivered another standout quarter and issued guidance well above market forecasts. The data centre segment grew +27% quarter-on-quarter (q/q) and +408% y/y in the company’s fourth fiscal quarter (F4Q) driven by GenAI-related demand for the company’s graphics processing units (GPUs), with strong sales to large cloud service providers in the West. It is remarkable that NVIDIA were able to beat expectations comfortably, while China sales “declined significantly” due to US government restrictions. It is also notable that this was before the ramp of many of their new products and was achieved while Taiwan Semiconductor Manufacturing Company (TSMC) capacity remains tight. CEO Jensen Huang sounded confident about continued growth in “CY25 and beyond” allaying fears of a peak or plateau from high levels, based on expanding customer end markets (not just cloud), sovereign AI demand (as countries look to build their own large language models (LLMs) and encourage domestic innovation). Strength in inference (as well as training), which accounted for 40% of data centre revenue in the quarter addressed bears who believe NVIDIA is best suited to training only. Management also noted that next-generation products are essentially sold out as demand far exceeds supply, despite TSMC ramping additional capacity into 2H24.
ARM Holdings (ARM), a leading semiconductor IP company, also performed strongly on better-than-expected results, with both licensing and royalty revenue well ahead of market forecasts. The company also issued positive guidance, benefiting from increased penetration of its new ARM v9 architecture, which has a royalty rate double that of ARM v8, on average, and significantly more for Data centre chips used for AI applications.
Strong results from ARM and NVIDIA spurred a rally in other names exposed to the AI infrastructure buildout, including Advanced Micro Devices (AMD). There were some less favourable reports in the subsector, however. Chip and silicon IP solutions provider Rambus reported an in-line quarter, but next quarter guidance was below expectations. We exited our position because we do not believe their content gains in AI servers are enough to offset cannibalisation impact on legacy servers where demand remains soft. Quanta Computer also lagged during the month due to concerns about trends in the general (non-AI) server market, but here we believe AI price/content gains should be sufficient to drive future growth.
Enterprise storage company Pure Storage reported solid results and forward guidance for 10% revenue growth and a 17% operating margin was better than feared. The company also signed an eight-figure deal with a “major GPU cloud provider” and expressed confidence in future growth because price/performance vs hard disk drive has improved markedly aided by new E-series product introductions.
In the internet subsector, e-commerce platform Shopify delivered strong results, with gross merchandise value (GMV) +23% y/y, and revenue and operating profit ahead of expectations. Next quarter revenue guidance was also ahead, but operating expense guidance was higher than expected as management opted to increase online and offline marketing investments. Online advertising platform, Trade Desk, announced better than feared results and forward guidance, benefiting from secular shifts to retail media (ads that are featured on a retail website, app or marketplace) and connected TV. Commentary was encouraging regarding upcoming product launches, and management believes the company is well positioned to weather Alphabet’s third-party cookie deprecation this year, benefiting from the continued adoption of its alternative identifier, Unified ID 2.0.
Uber Technologies (Uber) reported gross bookings accelerating 1ppt to +21% y/y, benefiting from traction in new verticals like grocery, the Uber One subscription programme and advertising. At a subsequent investor update, the company issued new long-term guidance with 2026 gross bookings (growing mid-high teens for the next three years) and EBITDA ahead of expectations. They also announced a $7bn buyback and reduced share-based compensation. Food delivery platform, DoorDash, reported results above market forecasts, with gross order value +22% y/y (ahead of Uber Eats at +19% y/y) although the magnitude of EBITDA upside was less than previous quarters. 2024 guidance for gross order value to grow +15% was below elevated buyside expectations but appears conservative given Uber’s more bullish guidance.
Results were mixed in the software subsector. Datadog, a monitoring and analytics platform for large-scale applications and infrastructure, reported full year revenue growth (+21% y/y) and operating margin guidance modestly below estimates. This could be conservative given usage by some of Datadog’s largest customers is growing and the contribution from AI increased again in 4Q23 (to 3% of annual recurring revenue, up from 2.5% in 3Q23), which could be an upside driver for 2024.
Cloud services provider CloudFlare, however, rallied after a strong print driven by federal and education verticals, as well as large enterprises, while full year guidance was better than expected. Management reiterated the company’s strong positioning in GenAI, particularly around inference-related tasks. CloudFlare now has inference-optimised graphics processing units (GPUs) running in >120 cities and should have coverage in nearly every location in which the company operates by the end of 2024.
Monday.com reported revenue growth of +35% y/y but missed elevated expectations after positive channel checks had driven a strong move up in the stock ahead of the print. FY24 guidance was at the low end of the FY24-26 guidance range for ‘high-20s to low-30s’ revenue growth shared at the recent analyst day. This may prove to be conservative, however, given that a c20% price increase should start layering in from this month. Customer relationship management platform, HubSpot, reported inline results given that SMB spending has been soft, with more “urgency” seen from larger customers in December. Management do not yet see a demand inflection on the horizon, however, prudently forecasting +18% revenue growth in 2024. Encouragingly, early feedback suggests HubSpot’s AI solutions are making a difference, particularly for their SMB customers where it can significantly improve the productivity of small marketing teams.
Outlook
We have long been excited about the potential for AI to change the technology landscape. More than six years ago we launched an adjacent AI strategy to capture opportunities within, as well as beyond, the technology market. At the time, we were certain the AI opportunity was huge but it was unclear when the technology would reach the so-called ‘tipping point’. It now appears the release of Chat GPT in November 2022 was that moment. Even as “AI maximalists” we have been positively surprised by the current pace of AI innovation and now expect a more rapid timeline to disruption of non-technology sectors. We also believe the experience gained since we launched our AI strategy has allowed us to pivot our core Technology Funds (including the Polar Capital Technology Trust) quickly to benefit from the expected acceleration in AI demand which we believe is just getting underway.
Investor opinions are clearly divided on the impact of AI (even among technology fund managers) with many sceptical about the sustainability of the trend; this bifurcation of positioning is becoming visible in performance too. We believe this is the start of a major new cycle and not the end. The abundance of positive AI news flow, new product/model releases and strongly supportive data points during fourth-quarter earnings season is hard to argue with. GenAI is a ground-breaking technology that, while in its infancy, is already incredibly powerful. It is easy to pick on the failures (including the high-profile release and subsequent withdrawal of Google’s Gemini image generation features) and/or undoubted regulatory risks (manageable in our view), but it is hard to deny the pace of innovation in the past 18 months has been anything other than incredible.
OpenAI released GPT-4 in March 2023, just four months after GPT-3.5, and is significantly more capable across a wide range of tasks. GPT-4 Turbo followed at the September Developer Day alongside multimodal capabilities including vision and text-to-speech. The extraordinary text-to-video Sora tool was announced just this month. Competition is intense: Google has also released multiple Gemini models in different sizes for different use cases and underlying chips, and startups such as PerplexityAI, Anthropic (Claude 3) and Mistral (Le Chat) are already in public use and comparable in performance to both OpenAI and Google on some metrics. Meta Platforms (Facebook) has released a range of open-source models which have seen widespread adoption including Llama 2 and an ecosystem of data and model tooling has sprung up including ScaleAI (data preparation), LangChain (app development) and HuggingFace (model repository).
A number of team members have attended technology conferences during the past few weeks. Nick was recently in San Francisco, meeting with many technology company CEOs and has said he cannot recall a time when a new technology has moved from the hype phase to widespread adoption so quickly. This is not a product cycle like smartphones or 5G, or a distant concept like the Metaverse. Instead, GenAI looks like the next general-purpose technology (GPT) in the making.
This appears to be supported by strength in hyperscale capex, as the four hyperscalers (Amazon, Google, Meta Platforms (Facebook) and Microsoft) raised aggregate 2024 capex growth expectations from +18% to +26%, with the incremental spend focused on AI. These are the early adopters, and they are seeing what AI is capable of within their own businesses. Corporates and governments alike will be compelled to invest in AI in search of productivity gains and to remain competitive: NVIDIA spoke to strong demand from sovereign buyers in their most recent quarter. We are also seeing early evidence of corporate buyers preparing for AI adoption which could presage an AI-ready hardware upgrade cycle in the coming quarters, even as near-term enterprise spending trends have been lacklustre.
One example is Klarna*, who announced last week they had built an AI assistant with OpenAI which, in its first month, has taken over two-thirds of Klarna’s customer service chats and is doing the equivalent work of 700 agents with a 25% drop in repeat enquiries and resolution time of two minutes versus 11 minutes previously. Klarna believe this will drive a $40m improvement in profit this year.
At our recent Polar Capital Investor Conference in London we likened the difference between general-purpose compute (serial, cost efficiency driven, flexible) and accelerated AI compute (parallel, performance-driven, specialised) to the difference between a Toyota Prius and a McLaren Formula 1 car: every single part needs to be rethought to solve for a different use case. This shift presents myriad active investment opportunities among the foundational technologies and the ‘new AI stack’ supply chain. As Anthropic CEO, Dario Amodei, put it: “Whenever you do something at a scale where it's never been done before, every single component, every single thing has to be done in a new way”. NVIDIA CEO Jensen Huang has talked about a doubling of the world’s $1trn data centre infrastructure installed based in the next five years, which will transition from general-purpose to accelerated compute to support AI.
If we are correct, there will also be considerable disruption with many winners from the prior cycle facing a classic incumbents’ dilemma. It is not that they do not understand the new technologies, it is because their business models (like Search in the case of Google) are built around legacy technology and the transition can be painful even for the successful. OpenAI recently unveiled a text-to-video generation tool called ‘Sora’ (the Japanese word for ‘sky’ to reflect its ‘limitless potential’) and showed extraordinary early demos; Adobe Systems (u/w) fell sharply on the day due to the perceived competitive threat. Even among the ‘Magnificent Seven’ year-to-date performance has fractured with NVIDIA and Meta Platforms (Facebook) materially outperforming on the back of AI-related demand and product success while Apple, Alphabet and Tesla are faring less well due to pressures on their core businesses (some due to regulatory headwinds or China exposure). More importantly, the impact of GenAI is uncertain on these businesses, so we have reduced exposure to this group, using them as a source of funds for higher conviction holdings.
While AI capex strength has supported related semiconductor, networking and hardware stocks, investors have been more divided on the implications for software companies. Indeed, semiconductors now make up c10% of the S&P 500 versus software at 12%, the narrowest gap since 2003. The early customer adoption of enterprise application software AI SKUs has been very positive (Microsoft, Adobe Systems and ServiceNow all spoke to their AI SKUs being their fastest-ramping products in history), but the longer-term implications of a new AI software paradigm will also bring challenges to incumbent application software vendors as activities and businesses are rearchitected using AI (we do not know what AI applications will even look like yet).
The fact that Klarna* has already been able to realise significant productivity and cost gains, and the underlying AI models are scaling in a predictable manner, suggests that the future capabilities of AI-powered software will be able to address many more use cases soon. The use of GenAI itself is also creating a much wider ‘attack surface’, providing another route to expose sensitive corporate and personal data, with data and model poisoning representing a new significant threat vector. This could be a major new market: Morgan Stanley estimates that GenAI-assisted cybersecurity could be a >$30bn annual category and only 14% of UBS CIO survey respondents have yet bought security products specifically to address GenAI threats.
Stepping back, the so called “lockout rally” we discussed last month remains in place; it is certainly harder to buy stocks like NVIDIA here if one has not been involved to date. Investors are understandably concerned about the likely volatility of AI-related stocks and the sustainability of AI-related capex, but we are more focused on the existence and continuation of ‘scaling laws’ (predictable changes in model performance due to increasing parameter count/training data). So long as these ‘laws’ continue to hold, model performance will continue to improve, driving a greater range of activities that AI will be able to reach. As always, our aim is to capture the underlying technology revenue and earnings growth potential (in this case infused by AI enablers and beneficiaries), while ameliorating volatility through a diversified portfolio of growth companies.
*not held
Ben Rogoff
Ben joined Polar Capital in May 2003. He is lead manager of Polar Capital Technology Trust plc and is a Fund Manager of the Polar Capital Global Technology Fund and Polar Capital Artificial Intelligence Fund.
Alastair Unwin
Historical Fact Sheets