Polar Capital outperforms benchmark at half-year stage

(ShareCast News) - Polar Capital Technology Trust reported a 41.2% increase in net assets to £1.13bn at the half-year stage.The share price on the other hand rose 40.5% during the six-month span to 31 October, which meant the discount on the shares versus the company's net asset value widened from 6.5% to 7.0%.In parallel, the company's Sterling adjusted benchmark was up by 39.1%, with stock in Advanced Micro Devices as the single largest contributor as the shares ran up by 144%.During the period, the US market continued to perform on both an absolute and relative basis, amid heightened mergers and acquisitions activity and a "robust" US dollar.Seven of the trust's positions were acquired during the period, Arcam, ARM Holdings, Demandware QLIK Technologies, Linear Technology, LinkedIn and Netsuite.Lessened fears of a 'hard landing' in Japan saw stocks in that market jump 30%, reversing a part of their earlier underperformance, helped by a supportive central bank and a rising yen.Europe on the other hand was a laggard, as political uncertainty, weakness in Sterling and worries about the health of the banking system weighed.Emerging markets on the other hand roared back as the Chinese economy and commodity prices stabilised, with Brazil and Russia performing especially well, the company said in a statement.Despite the recent strong run, Polar Capital said it remained "constructive" on markets, describing the prospects for a reacceleration in economic growth next year as "reasonable", with global GDP seen expanding at a 3.4% clip, up from 3.1% before."Even if early hopes prove typically optimistic (consensus estimates usually start 8-9% too high) earnings growth should still be attractive with upside associated with US tax reform yet to be factored in. As previously, stocks also continue to look compelling against both cash and bonds although we cannot know at what point higher nominal (and more importantly real) bond yields begin to hurt other asset prices. However, for now, it feels like upside risk is building as the potential for a so-called 'great rotation' from bonds to equities grows, evidenced by financial market resilience post the unexpected Trump / Brexit outcomes. Although near-term investor sentiment is a little ebullient, equity ownership remains below levels associated with major market tops - supportive of our long-held view that bull markets usually go out with a bang, not a whimper!," Polar Capital said.Commenting on the current economic policy debate in the States around greater fiscal stimulus, the Trust said that "these measures should materially reduce the risk of a US recession while challenging the current 'low rates forever' view that recently assumed short-term rates would remain below zero in the Euro area and Japan through 2020."