Tech rally lifts Polar Cap

Polar Capital Technology Trust outperformed its benchmark indices last year as global technology stocks bounced back strongly.Net asset value per share (NAV) in the year to 30 April 2010 rose by 45.4%, compared to a 39.6% increase on the Dow Jones World Technology Index and a 34.9% gain by the FTSE World Index.NAV at the end of April stood at 315.13p compared to 216.75p a year earlier. Currency movements had only a modest impact on returns with the weakness of the US dollar providing a sharp contrast to the previous year, though progress was impeded by the fund manager's decision to retain a modest amount of liquidity for much of the year and exposure to areas at the periphery of the portfolio such as medical technology and alternative energy that failed to fully participate in the rally.Performance was boosted by mergers and acquisitions activity as established companies in the technology sector looked to buy up faster growing smaller rivals.The gross revenue return for the year was £2.7m versus £3.72m a year earlier. The net revenue loss after taxation amounted to £1.95m compared to a profit of £0.57m in 2009.The total return for the year amounted to a profit after tax of £124.4m, compared to a loss the year before of £17.3m."While the macro picture remains unclear, there is much about which to be enthused in the technology sector. We are confident that a new cycle is well underway, one which will see a raft of new technologies gaining increasing adoption amongst both consumers and corporations," said Polar Cap's chairman Richard Wakeling. "Over the next five years, we believe that the earnings growth of technology companies will outpace that of the broad market eventually leading to an upward rerating of a sector that is currently valued at only a very modest premium to the market. The history of the sector suggests that such up-cycles can last for as much as a decade and, although never smooth, can deliver substantial outperformance. We expect the current cycle to be no different," Wakeling concluded.