Polar Technology trust benefits from 'evolution' in IT

Polar Capital's Technology trust rose 13.6% in NAV terms over the six months to 31 October, as its manager tilted the portfolio towards companies benefiting from web-based delivery of IT.

The £299m trust beat the benchmark Dow Jones Technology index, which rose 11.5% in sterling terms.

Ben Rogoff, manager of the 13-year old trust,  says the space is now "well supported" by a combination of sector earnings and M&A activity.

"It has been a very good period and the sector remains a good each-way bet for generalist investors who want a sector that does well, but does not have to refinance itself, like banks for example," he says.

Rogoff believes tech is entering a new cycle which may not really be captured by generalist investors.

He says underutilised servers which overuse vital power consumption are forcing firms to centralise data at centres built by groups such as Apple and Amazon, in what is known as cloud computing.

Rogoff is underweight companies which cannot adapt to this evolution, or whose business model is threatended by it - such as Microsoft and Hewlett Packard.

"As the large incumbent companies in the sector start to be impaired by the new cycle, what we are saying now will not seem so outlandish," the manager says.

Some companies have started buying competitors who offer technology disruptive to their own, Rogoff adds, while others have acquired rivals well placed to benefit from cloud computing.

The average M&A premium to market value paid in the sector this year has been 45%, the highest since the 1990s.