It’s a simple fact of modern investing that tech stocks need to be part of a broadly-based portfolio, but as the recent spell of volatility shows it can be a minefield.
What you want is a broad selection of high-quality, innovative companies exposed to long-run profitable technological change while avoiding the hype and bluster merchants which produce precious little shareholder return.
Shares believes Polar Capital Technology Trust (PCT) is one of the best, broadly-based tech funds around. Run for nearly 20 years by Ben Rogoff, it has an excellent record of superior investment returns averaging an 18.6% total return per year over the past decade versus 14.9% for the Nasdaq Composite and 12.7% for the S&P 500, according on Morningstar data.
That seemingly small percentage premium can add up to a significant difference over the years. For example, a £1,000 sum invested at 18.6% per year would leave you with £2,347 after five years versus $1,818 for the Nasdaq and the gap widens further over time.
Returns from tech have beaten the wider market massively over the years. For example, over the past decade Information Technology has been the best-performing sector in the US (and ergo the world) with an average total return of 20.1% per year. That’s nearly twice the returns of the next best Consumer Discretionary segment’s 11.8%.
Why? Because tech companies are increasingly dominating market profits growth. Data from S&P suggests this trend is accelerating too. In the June quarter 2024, Information Technology produced 20.5% of all S&P 500 earnings, the biggest single sector contribution. S&P’s own data has that share growing to 25% by December 2025.
With a portfolio of around 100 stocks, Polar Capital Technology not only captures the very largest companies – Nvidia (NVDA:NASDAQ), Microsoft (MSFT:NASDAQ) and Apple (AAPL:NASDAQ) are its three top holdings – but also tech companies you probably haven’t heard of.
These include science kit maker KLA Tencor (KLAC:NASDAQ), marketing software firm HubSpot (HUB:NYSE), plus a number of European, Japanese and other Asia-Pacific opportunities. Crucially, Rogoff actively manages fund stakes and weightings.
Nvidia is a great example, lifting the fund’s stake from 3.9% of assets to the current 11.4% during a spell when the share price soared from around $45 to $106 now. That sort of market savvy justifies the 0.81% ongoing charge in our view. With the trust’s discount to net assets wider than normal at 11.7% versus 8.4% on average, this is a great time to invest if you haven’t already.
DISCLAIMER: The author of this article (Steven Frazer) owns a personal stake in Polar Capital Technology Trust.
These articles are provided by Shares magazine which is published by AJ Bell Media, a part of AJ Bell. Shares is not written by AJ Bell.
Shares is provided for your general information and use and is not a personal recommendation to invest. It is not intended to be relied upon by you in making or not making any investment decisions. The investments referred to in these articles will not be suitable for all investors. If in doubt please seek appropriate independent financial advice.
Investors acting on the information in these articles do so at their own risk and AJ Bell Media and its staff do not accept liability for losses suffered by investors as a result of their investment decisions.
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