Polar Capital’s Technology Trust has lost almost 20% of its net asset value (NAV) per share according to its half-yearly report.
Since April the price per ordinary share has fallen 23.7% to 190.75p, while total net assets under management have dropped 20.5% to just over £300m.
Ben Rogoff, the manager of the trust, admits he underestimated the full impact of the credit crunch. “At the end of the last year we hoped we would see a soft landing. In January we revised this in anticipation of a recession but not a deep or protracted one. Our macro view was cautious but not cautious enough,” he says.
The half year to October 31 was stressful Rogoff says. The trust’s benchmark, the Dow Jones Global Technology index, fell 34.6% over the period, with Asian technology stocks the worst affected. However, as sterling fell this meant the index lost 19.8% in currency-adjusted terms.
Rogoff’s strategy was to retain cash and focus largely on liquid American large caps, but he is reinvesting his cash back into the market. “Over the last six months we have had approximately 7% cash, and we ended the last fiscal year with 4% to 5% cash. It is now more like 1.5%.
“This is not a nice environment, we are not complacent about that, but we think equities have discounted a very severe recession,” he says. “We are holding stocks that are trading at discounts to the market and have excellent balance sheets. Some of these companies have 10% to 15% of their assets in net cash,” he adds.
Rogoff sees America as offering high-quality large caps to ensure his portfolio remains defensive through the economic downturn. However, he emphasises this is a temporary measure. “I put the portfolio in an uncomfortable position because we do not believe in the long-term benefits of having a lot of large caps, but having a more defensive stance has been the right thing to do,” he says.
“I am holding safe, household name companies rather than companies that could disappear but eventually I will drop down the weights and stocks like Nokia, IBM and Hewlett Packard will no longer be in my top 10,” he adds.