Technology investment trusts from Polar Capital and Allianz have each delivered over 70 per cent to performance in the F&C Managed Portfolio Trust in the last financial year; however, its fund manager has warned on potential bumps ahead in the low volatility environment.
The investment trusts were the top performers for the £65.3m growth portfolio where NAV increased 26.4 per cent over the year, while private equity investment trusts delivered the strongest returns in the £58.2m income portfolio, which returned 24.5 per cent.
The FTSE All Share benchmark returned 24.5 per cent over the period ending 31 May.
Polar Capital Technology Trust and Allianz Technology Trust returned 69.3 per cent and 69.2 per cent respectively, while the Tech, Media and Telecoms sector returned 69.4 per cent over the period, according to FE data.
The investment trusts are the largest and third largest holdings respectively, accounting for 3.6 per cent and 3.1 per cent respectively, while the Monks Investment Trust rounds out the top three with 3.4 per cent.
Tech stocks have delivered strong returns in the first half this year, helping the majority of US active funds to enjoy a rare winning streak to outperform the market, according to Bank of America Merrill Lynch.
In the income portfolio the Princess Private Equity Holding delivered a 59 per cent return and NB Private Equity Partners gained 58 per cent.
F&C Managed Portfolio Trust fund manager Peter Hewitt says: “An important element of the long term investment strategy for F&C Managed Portfolio Trust is to maintain exposure to sectors which offer genuine secular growth opportunities such as technology, biotechnology and healthcare.”
However, Hewitt warns that with volatility at such low levels setbacks, when they occur, could be “sharp and uncomfortable”.
“That said, the global outlook remains constructive for equity markets. In terms of investment strategy, further progress from current levels is likely to be driven by earnings growth and not multiple expansion and, in this regard, that should favour Europe, Asia Pacific and Emerging Markets over the more highly rated US market.”
The investment trust has increased its dividend for its sixth consecutive year by 4.8 per cent to 5.45p.
Dividend yield on income shares is now 3.9 per cent, compared to 3.5 per cent in the FTSE All-Share Index.
The income portfolio took on £5m in gearing in the second half of the financial year at a rate of just over 2 per cent annually fixed for five years. The gearing for the portfolio sits at 8.7 per cent.