Polar Capital Technology Trust PLC (LSE:PCT), an investor in Nvidia, Microsoft, Apple and other tech giants, saw its discount between its share price and its portfolio widen to over 11% in the past year despite spending millions on share buybacks.
The FTSE 100-listed investment company repurchased 36.21 million shares during the year, or 2.6% of its total share capital, at an average 10.4% discount to net asset value, with a further 12 million shares bought back since the year end.
Meanwhile, NAV increased 3.1% to 325.2p for the year to 30 April, with total net assets broadly unchanged at £3.8 billion, which meant the trust underperformed its benchmark, the Dow Jones Global Technology Index, which rose 5.1% in sterling terms.
The share price declined 1.20% to 288.5p by year-end, resulting in the discount to NAV widening to 11.3%, though the share price has since jumped to 371p and NAV to 409p, meaning the discount is at 9.5% as of this week.
Chair Catherine Cripps said: “Whilst the macro-economic uncertainties remain and it is likely that market volatility will persist, we remain positive on the outlook for the sector with rapid developments in agentic AI falling into place.”
A new tiered fee structure took effect from 1 May 2025, lowering the base management fee and removing the performance fee entirely.
Investment managers Ben Rogoff and Ali Unwin highlighted ongoing volatility across the global technology sector during the year, with the sector adjusting to both macroeconomic headwinds and shifting investor sentiment.
"The sustained underperformance of small-cap technology stocks has made keeping up with the (mega-cap dominated) index a longer-term challenge," they said, noting that small caps have trailed big tech stocks by 63% over the past three years and 116% over five years.
"This has represented a considerable relative performance headwind given our structural underweight exposure to large/mega-cap stocks in a diversified portfolio," although they pointed out that the trust had delivered one of the best performances in its fund peer group over these three and five-year periods.
Stock selection in this segment proved challenging, while large-cap names benefited disproportionately from the market’s growing interest in artificial intelligence-related themes.
Portfolio positioning was further complicated by geopolitical uncertainty and market reactions to tariff announcements.
The report also noted that the portfolio remains exposed to the accelerating development of agentic AI, which is viewed as a long-term driver of sector performance.
This theme has seen early investment through select holdings, and the manager believes it presents a material opportunity for capital growth over time.
Elsewhere, the manager acknowledged the recent underperformance but reiterated confidence in the structural drivers underpinning the sector.
Ongoing innovation in semiconductor design, cloud computing infrastructure, and enterprise software stands out.
The portfolio is expected to continue reflecting these long-term themes into FY26.
Top 20 Holdings
- Nvidia
- Microsoft
- Meta Platforms
- Apple
- Broadcom
- Taiwan Semiconductor
- Alphabet
- Spotify Technology
- Cloudflare
- Arista Networks
- CyberArk Software
- Shopify
- Alibaba
- KLA
- Netflix
- SAP
- Amazon.com
- Tencent
- Axon Enterprise
- Corning