James Carthew: Blue skies ahead for technology trusts
Leading tech trusts have re-positioned their portfolios ready to capture sky-high returns.
I am delighted that Herald (HRI) has a future but Saba’s absurd pretence that it has done HRI’s shareholders a favour really grates. The costs that HRI has run up, the burden that this episode has placed on the manager and the board, and the cash drag from building up a cash reserve to fund a tender have weighed on the trust’s returns.
Nevertheless, HRI has grown its net asset value (NAV) by 44% over the past 12 months. This evidences a trend of better returns from small-caps, and perhaps, the start of a broadening out of the excitement around AI beyond a narrow group of mega cap stocks.
April was another extraordinary month for technology stocks. I hold the open-ended version of Polar Capital Technology (PCT) – I was drip feeding money into it and buying the open-ended was less complicated for me to navigate from the point of view of managing any conflict of interest than buying the trust, but I will probably make the switch at some point.
PCT has more than doubled its NAV over the past year, is marching up the ranks of the FTSE 100 index, and is generating returns that are well ahead of peers. I noted in December that the manager had been reducing its exposure to the mega caps in favour of companies benefitting from AI-related capital expenditure.
However, this is still very much a large cap portfolio, with 95.7% still in stocks with a market cap of at least $10bn.
Manchester & London (MNL), which seems to be pulling ahead of Allianz Technology (ATT) and now ranks second… read more here