In January 2017, I added Scottish Mortgage to my
SIPP and the following year I added Mid Wynd to my ISA and in June 2018, I decided
to add a third tech-focussed trust, Polar Capital Technology.
Launched in 1996, the trust has grown rapidly and
now has assets under management of over £1.9bn. It is a global trust however 70% of the holdings are listed in the
US. The trust has been managed by a team led by Ben Rogoff since 2006.
The trust has just over 100 holdings and the top
10 account for 41% of the portfolio and include tech giants Microsoft, Alphabet
(Google), Apple, Facebook, Amazon, Tencent and Alibaba. 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, Netfix 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 - PCT share price up 640% for example - and there is
likely to be some volatility but I see no reason why the sectors ability to
disrupt and grow should not continue.
Results
The trust has today released results for the year
to end April 2019 (link via Investegate). Net assets have increased by 24.8%
compared to the benchmark World Technology index 21.4%. Over the same period,
the FTSE All Share advanced by just 2.6%.
Over the last three years the trust has more than doubled
returns for shareholders - very similar to Scottish Mortgage.
 |
| 3 Yr Performance July 2016 to July 2019 (click to enlarge) |
My three technology holdings which includes SMT and Mid Wynd
will account for around 14% of my portfolio (SIPP/ISA). I am thinking I would
not wish to hold much more than this weighting due to the volatility of the
share prices.
My initial purchase price was £12.50 which represented a 2% discount
to NAV and today, with a wider more attractive discount of 9%, it stands at £13.76 - a gain so far of 10%. The trust does not pay dividends.
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!
Good to hear this is in your portfolio, DIY. I've one or two more top ups to make on TRIG and then this will be my next one to start building up. I think this will be the only IT I will hold which won't pay a dividend.
ReplyDeleteThanks weenie...and likewise, good to see you are adding TRIG to your portfolio. It is the largest weighting of my 'green'section.
DeleteIt's interesting you have decided to go for your first non-dividend portfolio holding. Are you re-evaluating strategy or will it be a one-off to complement your holding in Scottish Mortgage? Good luck with it anyway.
This will indeed complement my holding in Scottish Mortgage!
DeleteThe name made me think it was Green (or white) investments that you are investing in - but it seems like one of those many ITs that makes a killing after you find out about it and not after I buy it. :)
ReplyDeleteI'll stick to my ETFs but keep an eye out for this one - see how it performs over time!
Thanks GFF. Yes, I think it's always good to buy at a lower price, especially with volatile funds such as technology. Having said that, I think psychologically, it can be harder to pull the buy trigger during a falling market so maybe the best time to buy is 'now' or when the funds are available. Good luck with your ETFs - do you have any technology ones?
DeleteI used to hold technology funds in my portfolio and I wisely predicted 10+ years ago but failed to buy and hold.
DeleteSo, I've been a poor investor when it comes to technology - and it's in this area that there's been huge gains in share price over the last number of years - one reason why say the FTSE100 is where it was 10/20 years ago is because it's got no FAANGs - all banks/oil/pharma and little technology.
Sorry to hear that GFF but I suspect you are in good company and lots of investors will have sold out of positions with a nice profit of 50% when they could have gained 500% over the next 5 years by doing nothing. Certainly I have done this on many occasions.
DeleteAs for the FTSE, I think it has underperformed the US markets on a total return basis by quite some margin for at least the past decade and I am currently trying to avoid it due to its overweight allocation to fossil fuel oil & gas sector - mainly Shell and BP. Unfortunately it makes up 25% of the equity element of my Vanguard Lifestrategy fund so its not so easy.
Hi wondered what the motivation is to hold a sector IT rather than an index fund, is it hope to beat the market? Or fo you believe in technology and that will be a future sector which will outperform?
ReplyDeleteThanks Adam, an interesting question.
DeleteI like the global index funds which make up a large part of my portfolio. However, when I first started investing 30 years ago, I preferred trusts to funds and this has remained part of my investing strategy throughout the past 30 years.
Technology is by its very nature always changing very rapidly and I believe a good manager can add value compared to the index. This is the case over many years with this trust and with Scottish Mortgage and also Mid Wynd trust. I believe all three have good records v the index over various time frames.
I have no reason to think this will not continue so, in this particular sector, I prefer managed to index.