Polar Capital Technology has published results for the year ended 30 April 2014 that show its net assets growing by 11.2% and its share price by 10.9% but both lagging the increase in the Dow jones World Technology Index of 13.1%.
Very strong gains and outperformance of the index were given up in the last six weeks of the fund’s accounting year as investors took profits on technology stocks. The manager’s report says that performance relative to the benchmark was negatively impacted by not owning or holding underweight positions in a number of large-cap incumbents that delivered strong absolute returns during the year, including Apple (+26%), Hewlett Packard (+51%), Nokia (+106%) and Microsoft (+16%). Relative performance was also hindered by their belief that Japan would do well (when investors started to lose faith in Abenomics towards the end of the period) and the decision to retain some liquidity. The manager says though that the rotation away from growth/small-caps at the fund’s year end hurt performance most as small-caps ended up trailing their larger peers over the full year having outperformed by more than 10% during the first half. In terms of positives, the Trust was aided by a significant underweight position in IBM (-9%) the only stock in the DJ Industrials to have fallen during 2013. Relative performance was also generated by an overweight position in Facebook (+98%) and a number of off-benchmark positions such as Harman (+129%), Telit (+170%) and TripAdvisor (+41%). The Trust also benefited from M&A activity with three holdings – ExactTarget, Responsys and Sourcefire being acquired during the year at premiums that ranged from 29-52%.