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2. Source: Lipper. As at market close.
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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) | 50.00 | 36.67 | 138.85 | 527.22 |
NAV per Share (TR) | 41.04 | 39.25 | 143.25 | 585.01 |
Benchmark | 40.83 | 54.95 | 169.27 | 603.14 |
Discrete performance (%) | 31.03.23 28.03.24 | 31.03.22 31.03.23 | 31.03.21 31.03.22 | 31.03.20 31.03.21 | 29.03.19 31.03.20 |
---|---|---|---|---|---|
Ordinary Share Price (TR) | 50.00 | -12.20 | 3.78 | 40.17 | 24.68 |
NAV per Share (TR) | 41.04 | -8.07 | 7.40 | 54.91 | 12.76 |
Benchmark | 40.83 | -3.67 | 14.21 | 54.96 | 12.14 |
Data as at 28 March 2024.
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 28 March 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.
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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) | 3.81 | 15.61 | 15.61 | 50.00 | 36.67 | 138.85 | 527.22 |
NAV per share | 1.06 | 15.12 | 15.12 | 41.04 | 39.25 | 143.25 | 585.01 |
Benchmark | 2.68 | 13.62 | 13.62 | 40.83 | 54.95 | 169.27 | 603.14 |
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 | 31.03.23 28.03.24 | 31.03.22 31.03.23 | 31.03.21 31.03.22 | 31.03.20 31.03.21 | 29.03.19 31.03.20 | |
---|---|---|---|---|---|---|
Ordinary Share Price (TR) | 54.64 | 50.00 | -12.20 | 3.78 | 40.17 | 24.68 |
NAV per share | 47.92 | 41.04 | -8.07 | 7.40 | 54.91 | 12.76 |
Benchmark | 43.97 | 40.83 | -3.67 | 14.21 | 54.96 | 12.14 |
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.
NVIDIA | 10.5 | |
Microsoft | 10.0 | |
Meta Platforms (Facebook) | 5.6 | |
Apple | 5.1 | |
Alphabet | 5.0 | |
Advanced Micro Devices | 3.9 | |
TSMC | 3.2 | |
ASML Holding | 2.3 | |
Amazon | 2.2 | |
Micron Technology | 2.1 | |
Top 10 Holdings | 49.9 | |
Rest of Portfolio | 50.1 |
Total Number of Positions 102
Semiconductors & Semiconductor Equipment | 34.8 | |
Software | 23.7 | |
Interactive Media & Services | 11.4 | |
Technology Hardware, Storage & Peripherals | 7.5 | |
Electronic Equipment, Instruments & Components | 3.8 | |
IT Services | 3.4 | |
Broadline Retail | 2.6 | |
Entertainment | 2.6 | |
Communications Equipment | 2.0 | |
Machinery | 1.1 | |
Automobiles | 0.7 | |
Media | 0.6 | |
Hotels, Restaurants & Leisure | 0.6 | |
Healthcare Equipment & Supplies | 0.5 | |
Other | 1.8 | |
Cash | 2.9 | |
Note: Totals may not sum due to rounding.
Key | GBP | |
Total Net Assets | £4010.7m | |
AIC Gearing Ratio | n/a | |
AIC Net Cash Ratio | 2.96% | |
Large Cap (>US$10bn) | 89.4 | |
Mid Cap (US$1 - 10bn) | 10.0 | |
Small Cap (<US$1bn) | 0.6 | |
Cash | 2.9 |
US & Canada | 72.6 | |
Asia Pac (ex-Japan) | 9.3 | |
Japan | 5.6 | |
Europe (ex UK) | 5.3 | |
Middle East & Africa | 3.4 | |
Cash | 2.9 | |
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 28 March 2024
Key points
Market review
Global equity markets continued to rally in March, the MSCI All Country World Net Total Return Index gaining +3.0% while the S&P 500 Index and the DJ Euro Stoxx 600 gained +3.2% and +4.1% respectively (all returns in sterling terms). This topped off a strong first calendar quarter for risk assets with several indices making new highs, including the S&P 500, DJ Euro Stoxx 600 and Nikkei 225 – finally surpassing its 1989 record high.
Equity indices were supported by economic data which suggests the global economy continues to deliver reasonable growth while the disinflation process remains broadly on track. Markets have moved higher this year on the back of data supportive of a soft landing (where inflation moderates without a severe increase in unemployment) and optimism around AI.
Job growth remains strong as the US economy added 275,000 jobs in February, above forecasts of 200,000, with the largest employment gains occurring in healthcare and government sectors. Average hourly earnings rose +4.3% year-on-year (y/y), below forecasts of +4.4%. After a hotter January print, the US Consumer Price Index (CPI) annual inflation rate edged up to +3.2% year on year (y/y) in February, above forecasts of +3.1% y/y, but the Federal Reserve’s (Fed) preferred measure, core Personal Consumption Expenditure (PCE), came in slightly below consensus at +2.8% y/y. Brent Crude (+4.6% during the month) rose back above $85 for the first time since October on escalating geopolitical tensions in the Middle East.
As widely anticipated, the Federal Open Market Committee (FOMC) unanimously voted to leave the Fed funds rate unchanged at a 23-year high of 5.25-5.5% for a fifth consecutive meeting in March. The FOMC statement reiterated "the Committee does not expect it will be appropriate to reduce the target range until it has gained greater confidence that inflation is moving sustainably toward 2% ", but still forecast three rate cuts before the end of 2024 (unchanged from December) despite modestly higher GDP and inflation estimates.
Technology review
The technology sector slightly lagged the broader market in March, the Dow Jones Global Technology Net Total Return Index (W1TECN) gaining +2.7%. Large-cap technology stocks lagged their small and mid-cap peers; the Russell 1000 Technology Index (large cap) and Russell 2000 Technology Index (small cap) gaining +2.2% and +4.2% respectively. Given the pace of the AI infrastructure buildout, the Philadelphia Semiconductor Index (SOX) continued to lead, returning +3.8% (supported by NVIDIA +14%), while the NASDAQ Internet Index and Bloomberg Americas Software Index returned +1.7% and +0.3% respectively.
There were some notable results during the tail end of earnings season. In the semiconductor sector, Broadcom’s report was broadly in line with forecasts. While management did not raise full-year guidance, the networking segment was very strong, driven by an inflection in AI demand, with AI-related revenue growing +50% (quarter on quarter (q/q) up 4x y/y) to $2.3bn, offsetting weakness in other segments. Recently acquired VMware had a strong start and is expected to grow sequentially throughout the year. Marvell Technology Group reported in-line results, but next quarter guidance was soft due to weak demand outside AI, particularly from telecommunications carriers and enterprise networking customers. While we have reduced our position, the data centre business grew +54% y/y, driven by the strength of AI demand, and management expects further growth as the company’s AI silicon programs start to ramp up.
Memory supplier Micron Technology’s results and guidance were well ahead of expectations, driven by both AI and non-AI products. Management expects improving demand for memory, combined with supply constraints, to drive prices higher in 2024 and 2025, leading to record revenue and profitability going forward. Semiconductor production equipment vendor Disco also gave positive commentary about demand for its equipment for silicon carbide and high-bandwidth memory markets (for AI applications), and benefitted from the announcement of further stimulus from the Japanese government for semiconductor projects that favour local suppliers.
The other major event in the semiconductor industry was NVIDIA’s GTC (GPU Technology Conference), at which CEO Jensen Huang launched the Blackwell graphics processing unit (GPU), including the B100, B200 and GB200 superchips, as well as upgraded switch offerings and a host of partnership announcements. The performance metrics were impressive, particularly for the GB200, where NVIDIA is vertically integrating to deliver a c75% reduction in power consumption for large language model (LLM) training. Quanta Computer rallied after it emerged as one of the leading server manufacturers (at the rack level) for NVIDIA's new GB200 NVL AI server offering.
Advanced Micro Devices (AMD) underperformed due to the excitement surrounding NVIDIA’s new products. However, hyperscale cloud customers who are deploying AMD's MI300X GPU are seeing strong performance across training and inference and supply chain data points appear to support strong growth for AMD ahead (and likely improved sentiment at some stage, when they discuss their own product roadmap in more detail). ARM Holdings (ARM) also lagged after a period of significant outperformance in February. The IPO lockup expired on 12 March exerting downward pressure on the stock price, even if Softbank, ARM's largest shareholder, did not monetise any of their stake.
In the software sector, cybersecurity vendor CrowdStrike Holdings reported solid results and guidance. Annual recurring revenue (ARR) was well ahead of expectations. Management also highlighted a large cloud security deal with a “very fast-growing AI company”, providing them with a full suite of products that can protect LLM development.
Search and analytics platform Elastic reported results and next quarter guidance modestly above consensus forecasts but light of buy side expectations after a strong run, with continued softness in the small and medium-sized business market offset by strength in the enterprise market. MongoDB also missed expectations with lower than expected full-year revenue growth guidance. Underlying customer growth and consumption trends appear to be improving but management is accelerating investment, having dialled back last year, impacting operating margins in the near term. Adobe Systems (underweight (u/w)) delivered less net new ARR growth upside than in previous quarters and issued guidance below consensus estimates, failing to quell concerns that the risks posed by AI might outweigh the opportunities. More broadly, AI continues to cast something of a shadow over the software sector as investors grapple with what risk is posed to existing companies should AI materially change the architecture of future software applications. For instance, Klarna* recently announced a custom-developed AI assistant which after just one month is said to be doing the work of 700 full-time call-centre agents. The company estimates this could drive $40m in profit improvement this year. A supportive datapoint for AI adoption, but less obviously good news for existing packaged software vendors.
In the internet sector, Alphabet recovered from its underperformance in February, benefiting from press reports suggesting Apple are in discussions to license Alphabet’s Gemini AI models for upcoming iPhone software features this year. Despite this, Apple’s stock price was weak due to regulatory headwinds including a new Department of Justice antitrust lawsuit during the month, concerns about demand and competition in China and uncertainty about the company’s AI strategy.
Outlook
We believe generative AI represents a rare example of ‘discontinuous’ technology progress as performance/capability improves at a supernormal rate. This is akin to how the Bessemer process improved the price/performance of steel to such an extent that the New York skyline was transformed by the skyscrapers it enabled over the following half-century. Sitting here now, it is hard for most of us to imagine just how significantly generative AI is likely to reshape the landscape in almost every industry over the next decade, let alone predict the likely significant new markets it creates.
We have been technology investors for over 25 years and the pace of innovation since ChatGPT was launched in November 2022 is by far the fastest we have experienced. We remain incredibly excited by the potential impact of AI to create new markets and drive an inflection in productivity growth. While there are some parallels with the dotcom period, it feels more like 1995-96 – the beginning, rather than the end of a transformative period.
As is typical in new cycles, generative AI brings with it a major new computing architecture shift (in this case from serial to parallel computing), with virtually every single component of computing infrastructure reimagined. This stands in contrast with the ‘general purpose’ compute which has been the bedrock of cloud computing architecture, where the flexibility of the infrastructure (both in terms of elastic scaling and multiple different applications running on common hardware) is at the core of the value proposition. This move from general purpose compute to accelerated compute necessitates an entirely new supply chain and each individual component of an AI server has to be completely redesigned for an AI world.
We have long believed a growth-centric approach is best within the technology sector, but particularly so at times of accelerated technology disruption (winners from a new technology outgrow losers). As with prior discontinuous technology changes and computing architectural shifts, we believe there will be strong growth ahead but significant challenges for some incumbents (the so-called ‘incumbent’s dilemma’). Already, mega-cap returns are bifurcating with the so-called ‘Magnificent Seven’ rebranded as the ‘Fab Four’ which fits with the Trust’s significantly reduced position in Apple, less Alphabet and a tail position in Tesla, while maintaining larger positions in NVIDIA, Microsoft, Meta Platforms (Facebook) and Amazon.
Our reduced Apple holding reflects several regulatory headwinds and increasing competition in China, as well as our view that the company is currently behind in terms of AI. We will look for meaningful new AI announcements (perhaps around its developer conference in June) to rebuild our position. We also remain underweight Alphabet as generative AI could threaten the company’s dominant position (and/or economics) in search, despite its strong AI technical capabilities, talent base and data assets. While it is too early to label these technology behemoths as generative AI losers, they both have significant incumbency challenges to navigate and we will watch their progress closely.
We have also made several other noteworthy portfolio changes over the past year. First, we reduced our direct Chinese holdings significantly because of the ailing economy, increased geopolitical tension and export controls. Second, we cut electric vehicle/automotive-related exposure due to macroeconomic and competitive pressures; we have a minimum position in Tesla and negligible exposure to automotive semiconductors for now. The same applies to energy transition (for us largely solar-related stocks), which we have exited because of inventory issues, macro headwinds and higher borrowing costs (interest rates).
These changes have allowed us to continue to broaden and deepen our exposure to AI which we believe will make or break investor performance over the next decade, not just within technology but eventually across most sectors as history has demonstrated with earlier general purpose technologies.
More than six years ago, we launched a dedicated AI strategy within the technology team at Polar Capital. This has allowed us to accumulate knowledge and experience in a space that is broad, and rapidly evolving. To date, this has enabled us to deepen and diversify PCT’s exposure to the AI hardware opportunity, beyond understandably well-owned US chipmakers such as AMD and NVIDIA. Our team of 10 dedicated fund managers and analysts are travelling extensively, meeting company management and industry experts regularly. We are also using generative AI tools ourselves, including innovative AI-infused packaged software (such as Quartr and AlphaSense) and several AI projects of our own to enhance our analyst productivity and our screening processes. The more we use AI and the more we meet with and listen to the visionary founders of companies such as OpenAI, Scale AI, Anthropic and Perplexity AI, the greater our conviction has grown.
We therefore strongly believe the market is still significantly underestimating the true potential of generative AI. Even within the technology sector, however, this has led to a noticeable divergence in returns so far this year. For now, we expect these trends to continue to support the Trust’s positioning and we remain constructive and fully invested. That said, as with previous cycles, rapid change brings uncertainty; investors should be prepared for and able to tolerate sentiment swings (both positive and negative) and bouts of increased volatility during this exciting transition period.
* 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
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