I recently reported on the results for Polar
Capital Tech Trust and the recent sell-off in this sector has provided an
opportunity to add a second string to my bow. I am thinking that the Covid
pandemic has highlighted the increasing reliance we all place on technology and
the trends which have been building for several years are likely to continue as
the Covid situation recedes. I have therefore decided to increase the tech allocation in my portfolio.
This trust was established in 1995 to give
investors a chance to gain exposure to the tech sector. Although the trust is
UK-listed, since 2007 it has been managed by a team based in San Francisco and
close to Silicon Valley, home to many of the world's big tech companies.
The strategy is to identify a number of themes
such as cloud computing, security, e-commerce and electric vehicles for example
and hold some of the best companies within these sectors over the longer term.
 |
| Cloud-based cybersecurity |
Some current top ten portfolio holdings include
Apple (6%), Microsoft (3.5%), Crowdstrike (3.5%), Tesla (3.4%) and Zoom (3.0%).
The trust has a good performance record with returns of 30% in the current year
to date, 25% last year, 41% in 2018, 42% in 2017 and 15.8% in 2016. It is
actually the top performing investment trust over both the past 5 years and
also 10 years - ahead of the likes of Scottish Mortgage, Biotech Growth and
Linsell Train.
Commenting on recent half-year results, investment
manager Walter Price said:
"In
many cases, several underway trends have been turbocharged due to the Covid-19
environment and we expect the leaders of these trends to benefit for multiple
years. A few examples include the transformation of retail to omnichannel and
e-commerce, autos to electric transportation, entertainment to subscription and
video-on-demand delivery over the internet, and company infrastructure to cloud
first.
Supply
chain disruptions have exposed vulnerabilities with having one geographic
center for production, and we expect to see increased investment in
diversification of production after this crisis. The trend toward more
automation in production and distribution facilities will be accelerated. The
world will not be the same on the other side of this pandemic, and we believe
technological innovation will be the driving force of the necessary
transformations for businesses and consumers".
...and
concluded:
"We
are in a period of rapid change, where the importance of technology is key to
the prosperity of most industries. Looking ahead, this environment is likely to
provide attractive growth opportunities in many technology stocks".
 |
| YTD Performance v Polar Capital Technology Trust (click to enlarge) |
Obviously it helps that I no longer require income
from my investments as this trust is all about growth and does not pay a
dividend. However, as I have pointed out in the past, it is possible to take
'income' from capital appreciation. For example, selling down shares to provide
4% income from a trust which is growing at an average of over 20% each year
should not be too difficult.
The recent 15% dip in the tech sector has provided an
opportunity to add this trust to my portfolio at the price of £22.50. I expect there will be further volatility over the coming weeks and months and may well add to my initial purchase in due course. This addition takes my allocation to 10% including my individual holdings of Microsoft, Google and Tesla and I would like to increase this to 20% over the coming year.
More on this following the full year results next
Spring. In the meantime I just have to hope the managers don't add SpaceX to the portfolio!
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!
No comments:
Post a Comment