LONDON (Alliance News) - Polar Capital Technology Trust PLC's chairman referred to an episode of British motoring television programme Top Gear from 2007 as he said the equity market has morphed into a "stretched bull market" from a "stealth bull market".
In a statement issued on Friday, Chairman Michael Moule said the "slow and muted" recovery in developed markets means the business cycle is lasting for longer.
"An overload of UK politics moved me onto an old episode of 'Top Gear' where the trio were asked to make economical stretched limos," the chairman said.
The Top Gear episode had the presenters turn everyday cars into stretch limos, before taking celebrities to the Brit Awards, the British equivalent of the Grammy music awards in the US.
"Equity markets always enjoy early stages of recovery which is why Europe and Japan are the two most popular developed markets at present and also large beneficiaries of weaker oil and gas prices. In the US the economic recovery is well entrenched but the stronger dollar tends to postpone the need to raise interest rates," Moule said in a statement.
"Whilst cash yields are zero (negative for the Swiss franc and the euro), and government bond yields remain at historic lows it is easy to see why savings continue to leak into equities, property, antiques, classic cars, farmland etc. I have no idea when this financial experiment will end but at least the upper reaches of the US equity market will provide liquidity which may prove to be a rare asset when the zero interest rate music stops," Moule added.
The chairman's comments came as the trust said its performance was superior to that of the benchmark in its last financial year ended April 30, with its net asset value rising by 30.7% on a total return basis.
The Dow Jones World Technology Index rose by 29.5% on a total return basis, adjusted for sterling with relevant withholding taxes removed.
"The scale of the increase was partially attributable to a recovery from the final six-week collapse in US technology shares which depressed our 2014 year end, and also a circa 10% increase in the dollar vs sterling. No performance fee is payable this year as the manager needs to catch up on the underperformance since the previous fee was paid in 2011," Moule said.
By Samuel Agini; samagini@alliancenews.com; @samuelagini
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Polar Capital Technology Trust (PCT)