Wednesday, 27 June 2018

Polar Capital Technology - Portfolio Purchase

My need for income generation is now much reduced following the start of my state pension and therefore I will begin to tilt my strategy more towards growth.

In January 2017, I added Scottish Mortgage to my SIPP and have recently topped up the holding. Earlier this year I added Mid Wynd to my ISA and this week I have added a third tech-focussed trust Polar Capital Technology.

Launched in 1996, the trust has grown rapidly and now has assets under management of over £1.7bn. It is a global trust however 70% of the holdings are listed in the US. The trust is managed by a team and led by Ben Rogoff since 2006.

The trust has 107 holdings (currently) and the top 15 account for 50% of the portfolio and include Microsoft, Alphabet (Google), Apple, Facebook, Tencent, Amazon and Intel. These tech companies are fundamentally transforming the way we live our lives in a similar way to the impact of the industrial revolution.

The combined market cap. of the so-called FAANG stocks - Facebook, Apple, Amazon, Netflix and Google - now exceeds the total annual GDP of the UK. I believe the long term growth prospects for this sector offer investors significant rewards. Yes, these tech stocks have done well since the market turmoil of 2008/09 and there is likely to be some volatility but I see no reason why the sectors ability to disrupt and grow should not continue.

3 Yr Comparison v Scottish Mortgage
(click to enlarge)

Over the last five years the trust has delivered a total return of 201% compared with 162% for the DJ World Technology Index.

Here's a link to the latest monthly factsheet (pdf). The trust is due to report full year results in July.

For me, these three holdings which includes SMT and Mid Wynd will account for around 15% of my portfolio (SIPP/ISA). Some investors will avoid technology investments as they are perceived to be higher risk global equity options but maybe in the long run it is higher risk not to hold the sort of companies which are shaping the future. Of course these holdings will mostly be covered in a low cost global index fund and the likes of Vanguard Lifestrategy will continue to be my core holding and my tech trusts forming part of a wider, diverse portfolio.

My initial purchase price is at £12.50 which represents a 2% discount to NAV and as with SMT, I will look to top up during periods of share price weakness down the line.

As ever, this article is merely a record of my personal investment decisions and should not be regarded as an endorsement or recommendation - always DYOR!


  1. Thanks for the posting - always a really interesting read. Would you mind if i asked - do you have a maximum number of funds that you intend to hold or happy to buy/sell depending on performance?

    1. Thanks. I don't hold a number but I think more than 20 would be too many. I sometimes think I could get by just fine with my Lifestrategy 60 multi-asset fund but some of my ITs such as Aberforth, Finsbury have done a very good job over many years and therefore it would be foolish to give them up.

      I have now sold Edinburgh and used the proceeds to purchase Polar so yes performance will be a factor as will a shift in strategy as I move away from income towards global growth.

  2. I always like your updates. But I have a very basic question which I hope you don’t find rude. If you are drawing the state pension, I can guess your age. Why are you investing for growth?

    1. Not rude at all Chris. The short answer is that I no longer need my portfolio to generate the natural income compared to my requirements over the past 10 years. I will therefore look to replace/reduce some of my UK income funds with others such as Scottish Mortgage and Polar Capital Tech for example but also increase my global passive index.

      In fact I have just opened a new position with Baillie Gifford Managed fund and will post on this in the coming few days.

      I will also try to update on future strategy (post state pension) and try to explain some rationale in a little more detail.

  3. Thanks for your reply. A few years ago I returned to Heathrow after a long business trip, circa 10am. In the taxi back the driver said this would be his last job of the day, he would head home and play in the garden with his kids. He had no interest in earning more that day, and he “didn’t want to be the richest guy in the graveyard”.

    That phrase has stuck with me ever since.

    So I guess my question is: if you have enough income, why are you investing for growth? What will you do with it?

    1. Yes, I have heard that saying before. Broadly speaking the returns from an income fund when that income is reinvested could be similar to the returns from a growth fund that generated little or no income.

      I guess therefore the question would be, if I have enough income for my needs from other sources, why bother investing at all? To which I am thinking -
      1 I enjoy the process
      2 Investments give a much better return than cash so why wouldn't I
      3 I have more options and flexibility down the line
      4 My family will hopefully benefit when I am gone

      I think going beyond these points would be getting into philosophy so will leave it there Chris....

  4. I’m curious that for your excess wealth you elect to invest it. Thoughts 1-4 are worthy and I fully share thought 4 which is probably common to readers of sites like this.

    But it strikes me there is another option: spend it on yourself and your loved ones now, while you can share and enjoy that together. Either on stuff or experiences/holidays together. Have you maxed-out on that?

    1. Yes, true I could spend it rather than invest. For some, maybe many this would be a priority. However my needs are few and modest so I do not need more 'stuff' and holidays...well I like to get away to the Welsh coast 2 or 3 times each year for a change of scenery but I feel as if I am 'on holiday' every day and free to happily drift along with my routine. Of course, my good health (so far)is my real wealth so that is an area I will be looking to improve a little...I think I need to take a leaf out of weenie's book and think about a regular gym visit...after the World Cup and Wimbledon...

      So, yes happy just to chug along.