by Jennifer Johnson, Investors’ Chronicle, February 14, 2024:
At first glance, London’s largest dedicated technology trusts aren’t overexposed to the fabled ‘Magnificant Seven’ stocks that dominated the US market last year.
Open-ended funds can only hold 10 per cent in a single company, meaning they must underweight the megacap companies that sit at the top of global tech indices. Both Allianz Technology Trust (ATT) and Polar Capital Technology (PCT), by contrast, can hold up to 15 per cent in a single stock, yet both are underweight the sector behemoths..
But the tide now appears to be turning, at least in some corners. Last month, Allianz Technology re-entered the 10 most popular investment trusts on the Interactive Investor platform, as Polar Capital did in December..
Now, as the possibility of rate cuts comes into view, Halberstadt predicts there will be a dispersion of returns towards smaller players. That is, investors may begin to look more favourably at funds that contain a wide range of tech holdings, rather than chasing incredible returns from a handful of individual companies. This is likely to be beneficial for both ATT, which has a portfolio of 44 holdings, and the 100-strong PCT..
Richard Williams, a research analyst at QuotedData, notes that some 80 per cent of the portfolio is currently invested in companies the fund’s managers think are AI enablers or AI beneficiaries. “For instance, PCT is massively overweight on [Nvidia rival] AMD (US:AMD),” he said. “Spending on AI infrastructure isn’t all going to go to Nvidia, and investors might start looking elsewhere for companies that will benefit from chip demand. AMD is definitely one of those companies.”
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