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Polar Capital Technology Trust PLC on Wednesday played down fears of a bubble in technology valuations as it hailed a ‘remarkable’ first half of its financial year. The London-based technology investor said net asset value per share rose 66% to 539.97 pence at October 31 from 325.20p at April, while its share price climbed 65% over the same period. This outperformed the trust’s benchmark index, the Dow Jones Global Technology Index, which increased 48% over the same time frame. No interim dividend was declared, unchanged from a year ago, and Polar Capital said there is no intention to declare a dividend for the financial year ending April 30, 2026. Polar Capital Technology said it was a ‘remarkable’ half year, even if absolute returns were ‘flattered by the weak close to our last financial year’, which closely followed the announcement of high US trade tariffs. The relative performance over the period was ‘among our strongest in some time, while its outperformance versus peers - which was already strong across most time frames - has extended meaningfully,’ the trust added. Polar Capital Technology said the real driver of relative performance was its ’AI maximalist’ positioning, which aligned well with accelerating AI adoption and surging infrastructure investment. The trust said it also benefited from an ’underweight’ position in Apple Inc, which lagged the benchmark, amid tariff concerns and an uncertain AI strategy. Positions in Broadcom Inc, Advanced Micro Devices Inc helped, as did overweight exposure to memory chip manufacturers, which produced some ‘spectacular’ returns during the half year, notably SK Hynix Inc, up 221%, and Micron Technology Inc, up 196%. Another ‘important’ source of outperformance came from significant exposure to networking stocks, Polar Capital said, exposure to the ‘power and cooling theme’ and an ‘significant’ underweight exposure to the software sector which materially underperformed during the period. The largest negative contributions to relative performance came from cash and Nasdaq put options. Looking ahead, Polar Capital Technology said while high company valuations present a ‘challenging starting point for long-term future returns, they are poor predictors of near-term returns’. ‘We do not see valuations at levels that preclude further expansion, although the high starting point does represent additional risk should the market environment deteriorate,’ it added. ‘While valuations are extended, we do not believe they are extreme nor at bubble levels today,’ the trust said, adding, ‘AI demand is real and continues to outpace the industry’s capacity to supply it, unlike during the dot.com bubble.’ ‘While we expect our bullish outlook to be periodically tested by bouts of volatility, we remain AI maximalists,’ the trust added. Shares in Polar Capital Technology were up 0.3% to 476.55 pence each in London on Wednesday morning. Copyright 2025 Alliance News Ltd. All Rights Reserved.
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