Polar Capital Technology – Jockeying for position

Weakened risk appetite among investors as macroeconomic headwinds persist are likely factors in the woes of the technology sector. As investors appeared to retreat to the sector titans (stocks such as Microsoft and Apple), Polar Capital Technology’s (PCT’s) underweight position in these companies has seen it underperform its benchmark over the 12 months to the end of November, while its exposure to ‘next-generation’ software companies has also been a source of underperformance versus legacy stocks as IT budgets are disproportionately squeezed. PCT’s manager, Ben Rogoff, is undeterred by this and plans to take advantage of valuation compression to double-down on its ‘next-gen’ thematic position and will continue the portfolio’s pivot towards secular growth stocks, focusing on companies with strong balance sheets that he hopes can perform well in a more challenging backdrop.

Recent inflation data and a more dovish central bank rhetoric may suggest that peak inflation may have been hit, which the manager says could result in an easing of interest rate expectations and a raising of investor appetite.