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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.
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!