Polar Capital Technology Trust’s (PCT’s) recent strong performance, in an increasingly volatile sector that is being reshaped at breakneck speed by artificial intelligence (AI), reinforces the value of its conviction-led, actively managed strategy.
For the 12 months to 31 July, PCT’s net asset value (NAV) rose 30.2%, well ahead of the 20.5% gain from its benchmark, the Dow Jones Global Technology Index. This follows several years where large index constituents – notably Apple, Microsoft, Alphabet and NVIDIA – outperformed, leaving active managers who were underweight those names trailing. That dynamic has shifted in 2025, as some of those former high-fliers have stumbled in the AI race.
PCT’s lead manager, Ben Rogoff, has long argued that AI’s rapid development would unsettle established leaders and create openings for new winners. That thesis is playing out. PCT’s long-standing underweight positions in Apple and Alphabet, the largest they have ever been for the trust, have boosted relative returns. Apple has struggled to integrate AI meaningfully into its products, while Alphabet faces structural questions over whether AI-generated search will erode its advertising dominance.
Instead, Rogoff and his team – one of the largest specialist technology investment groups in Europe – have spread the trust’s assets across the broader AI ecosystem. This includes companies supplying the power and networking infrastructure essential for AI’s expansion, such as GE Vernova, whose shares are up 300% over the past year, and networking specialist Credo Technology, whose revenues have jumped 180% year-on-year, as well as cloud and semiconductor names benefiting from surging AI-related capital expenditure.
Why active management matters now
Today’s AI-driven environment appears the perfect proving ground for active management. The rapid pace of innovation creates both opportunities and risks that a passive approach struggles to manage effectively.
History supports that view. Past waves of technology disruption – from the dot-com era to the mobile revolution – saw market leaders toppled and newcomers ascend quickly. In AI, the pace of change is even faster, with model capabilities improving at rates that vastly outstrip previous tech cycles.
The AI sector is also prone to sharp shocks. Earlier this year, the release of DeepSeek’s R1 model – reportedly trained at a fraction of the cost of its rivals – wiped $1trn off US tech market capitalisations almost overnight, before valuations recovered. Such volatility is likely to be a recurring feature as competition intensifies and new use cases emerge. An experienced manager with the skillset to identify future winners – and arguably more importantly, spot potential losers – and the flexibility to shift positioning quickly is better placed to protect capital and capture the upside in these conditions.
PCT’s active share (the percentage of holdings in the portfolio that differs from the benchmark) – at around 50% – is as high as it has ever been, with the manager willing to hold zero weightings in large index constituents if it believes their growth prospects are unconvincing.
AI’s growth engine is still running hot
Despite significant macroeconomic headwinds – including a more hawkish US Federal Reserve, cooling labour markets, and rising geopolitical tensions – AI’s growth trajectory remains robust. Hyperscale cloud providers such as Amazon Web Services, Microsoft Azure, and Google Cloud are ramping investment aggressively, with combined capital expenditure forecast to grow 20% in 2026.
Importantly, these investments are already showing up in earnings: Microsoft, Meta and Alphabet all recently reported double-digit revenue growth driven by AI-related services.
Adoption is accelerating too. A survey of 30,000 businesses by Ramp found that 42% of companies had paid subscriptions to AI models, platforms and tools in May 2025, compared to 26% at the end of 2024 and just 17% in January 2024. Consumer engagement is rising at a similar pace, with Menlo Ventures estimating that 61% of US adults used AI in the past six months.
Looking ahead
PCT’s manager expects further volatility in AI-related stocks as the market digests rapid innovation, new entrants, and shifting business models. With AI adoption reaching an inflection point and its economic impact widening across industries, PCT’s combination of deep sector expertise and high-conviction positioning makes it well placed to navigate – and capitalise on – the next phase of the technology revolution.
As the market recognises the benefits of an active approach in this context, there is plenty of scope for further outperformance and a tightening of PCT’s current discount to NAV. With shareholders being asked to vote on the trust’s continuation (which is held every five years) at its upcoming AGM on 10 September, it would therefore seem unfathomable if it were not to pass with flying colours. In any event, we would encourage shareholders to exercise their right to vote.
