Polar Capital Technology Trust (PCT) delivered an exceptional year to 30 April 2026, with its net asset value (NAV) per share rising by 102.2%, comfortably ahead of the 55.0% return from its benchmark, the Dow Jones Global Technology Index. The trust’s share price performed even more strongly, increasing by 109.0% to 603p, as the discount narrowed from 11.3% to 8.3%. Total net assets almost doubled, rising from £3.8bn to £7.3bn. The manager described the year as one of the strongest periods of relative performance in PCT’s history, with its “AI maximalist” positioning benefiting from accelerating adoption of artificial intelligence, a surge in spending on supporting infrastructure and a widening divide between the technology companies expected to benefit from AI and those at risk of disruption.
The trust’s NAV return exceeded its benchmark by more than 47 percentage points, with stock selection contributing positively across every major geography and market-cap segment. Performance was particularly strong among smaller and medium-sized companies exposed to semiconductors, networking, data storage, power and cooling infrastructure. The semiconductor supply chain was a major source of returns. Holdings in SanDisk, SK Hynix and Micron Technology benefited from strong demand for memory used in AI systems, while Seagate Technology and Western Digital gained from rising data-storage requirements. PCT also made sizeable gains from companies supplying networking equipment and components needed to connect increasingly large and complex AI computing clusters. Lumentum, Ciena, Corning, Fujikura and Celestica were among the largest contributors. Exposure to the power and cooling requirements of data centres also proved rewarding. Delta Electronics, GE Vernova, Vertiv, Siemens Energy and Caterpillar all added to returns as investment in AI infrastructure continued to accelerate.
Avoiding AI’s potential losers
An important part of the trust’s outperformance came from what it did not own. PCT maintained a substantial underweight position in software, reflecting the managers’ concern that many incumbent software companies could struggle to preserve their competitive advantages as AI makes code cheaper to produce and allows users to bypass traditional software interfaces. Underweight positions in Microsoft, Salesforce, Intuit, SAP, ServiceNow, Adobe, Oracle and IBM all contributed positively to relative performance as software valuations fell sharply. The trust was also significantly underweight Apple. Together, its underweight positions in Microsoft and Apple were among the largest individual contributors to performance.
However, an underweight position in Alphabet detracted after the shares recovered on a better-than-feared outcome from its US antitrust case and improved sentiment towards its Gemini AI models and proprietary chips. Call options on Alphabet offset some of this impact. PCT’s average cash position of around 4.8% was the largest drag on relative performance, while Nasdaq put options used to provide protection against sharp market falls also detracted. The managers said that these positions should be considered alongside the portfolio’s above-market sensitivity to technology and AI stocks.
Discount narrows
PCT bought back 55.8m shares during the year, equivalent to 4.8% of its issued share capital, at an average discount of 10.1%. The purchases helped the share-price discount narrow to 8.3% by the year end. A further 7.1 million shares were repurchased between the year end and 2 July 2026. The board said it would continue to use buybacks at its discretion in normal market conditions, while retaining the option to issue shares should they trade at a premium.
The trust’s ongoing charges ratio fell from 0.77% to 0.69%, following the introduction of a lower management fee and the removal of the performance fee from 1 May 2025. Under the revised arrangements, Polar Capital receives 0.75% of NAV up to £2bn and 0.60% on assets above that level.
AI investment continues to accelerate
The managers believe that AI has moved beyond its initial phase as a tool that assists workers and is increasingly capable of carrying out multi-stage tasks autonomously. They point to rapid growth in consumer usage, enterprise adoption and spending on AI infrastructure. Consensus forecasts for hyperscaler capital expenditure in 2026 rose from $314bn at the beginning of 2025 to $751bn by April 2026. PCT’s managers believe that this spending remains rational because access to computing capacity is constrained and the leading technology companies cannot afford to fall behind in the race to develop frontier AI models. They expect AI investment to continue supporting demand for semiconductors, memory, networking equipment, data centres, power generation and cooling systems.
However, they are increasingly cautious on many established technology businesses. In their view, AI could undermine companies whose competitive positions depend primarily on proprietary software, established workflows or the cost of recreating their products. The managers have reduced PCT’s exposure to the largest US technology companies, with the so-called Magnificent Seven now accounting for around 29% of the portfolio compared with more than half of the benchmark. They believe the next phase of the technology cycle could resemble the personal computer boom of the early 1990s, when a change in computing architecture rapidly displaced established market leaders and created new winners.
Wider opportunity set
PCT is currently at its largest underweight position in the US for many years, reflecting reduced exposure to software and internet companies and increased investment in semiconductor and hardware businesses in Japan, South Korea and Taiwan. The managers expect market leadership to broaden beyond US mega-cap technology stocks, with AI creating opportunities across smaller companies, physical infrastructure and industries where assets such as energy, land, data, manufacturing expertise and intellectual property remain scarce. They also believe that a more volatile market could favour active managers, particularly if the dominance of the largest technology companies continues to weaken.
Despite the scale of recent gains, the managers do not believe that AI-related stocks are yet in a bubble. They argue that current conditions are closer to the middle of the 1990s technology cycle than its speculative peak at the end of that decade. Nevertheless, they expect volatility to remain elevated. Risks include disappointing returns from AI investment, slower model development, regulation, constraints on energy and semiconductor supply, geopolitical tensions and the increasing use of debt and private capital to finance data centres.
A further concern is the impact of AI on employment. The managers believe that markets may be underestimating the risk that AI displaces jobs faster than new ones are created, potentially weakening demand and prompting political intervention. Even so, their central case remains positive. They expect resilient economic growth, rising corporate earnings and continued investment in AI to support technology companies, while creating a broader and more varied set of opportunities than in the previous era of US mega-cap dominance.
Chair Catherine Cripps said the board remained confident in the long-term outlook for technology, although further weakness in the US dollar could prove a near-term headwind because a large proportion of the portfolio is denominated in dollars.
The results also mark Ben Rogoff’s 20th year as PCT’s lead manager. During his tenure, the trust’s NAV has risen by 2,498%, compared with a 1,825% increase in its benchmark.
Richard Williams, senior analyst at QuotedData, said “These are outstanding results, with NAV returns almost double that of the benchmark reflecting the manager’s exceptional stock selection positioned around the AI infrastructure investment cycle. Holdings across the AI supply chain, including memory, storage, networking and semiconductor equipment, generated significant alpha, while the manager’s longstanding underweight positioning within the “Mag7” also proved beneficial as the market reassessed the long-term implications of AI disruption for incumbent software businesses. The manager believes that accelerating enterprise AI adoption and continued hyperscaler infrastructure spending should continue to underpin attractive returns going forward and we are confident it can continue to extract them, even against a backdrop of elevated geopolitical and macroeconomic uncertainty.”
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