Polar Capital Technology’s results for the year ended 30 April 2016 have been published. The global technology sector performed better than the broader indices for most of the financial year but finished in line with the FTSE World Index after a sharp decline in several of the leading technology stocks in April. Polar Capital Technology’s Net Asset Value increased by 1% versus a decline of 0.1% in its benchmark.
In the US the most significant positive contributor to performance was Amazon (+64%) which delivered strong growth and improved profitability in both e-commerce and public cloud computing. The portfolio also benefited from its off-benchmark exposure to computer gaming companies including Activision Blizzard (+60%), Electronic Arts (+12%) and Ubisoft (+65%) that benefited from strong console sales and growing digital delivery of content. Outside of the US, they managed to add value in all major regions with the exception of Japan where performance modestly trailed the benchmark. Relative performance was also positively impacted by underweight positions in a number of large index constituents that delivered disappointing returns during the year, including Apple, Ericsson, Hewlett Packard, IBM and Qualcomm. The Trust also benefited from its underweight PC exposure as waning demand weighed on key suppliers such as Micron, Seagate and Western Digital. M&A also contributed positively to performance with two holdings – Cvent and Ruckus Wireless – acquired during the year at healthy premiums. Their decision to retain some liquidity also added value, in part due to pronounced Sterling weakness. In terms of negatives, relative underperformance was generated by an underweight position in Microsoft (+10%) where cloud growth more than offset sluggish PC trends. The Trust was also negatively impacted by sharp share price declines at LinkedIn, Nimble Storage and Twitter following earnings disappointments while broader compression of next generation valuations saw holdings such as Demandware, Netsuite and Splunk generate negative returns despite delivering strong fundamental growth during the year.
PCT : Polar Capital Technology edges ahead of benchmark