Based in 1996, Polar Capital Know-how Belief‘s (LSE:PCT) a stock that won’t attraction to these looking out for passive revenue alternatives. That’s as a result of it doesn’t pay a dividend. The truth is, it by no means has. And it’s the one present member of the FTSE 100 that adopts this strategy to shareholder distributions.

As an alternative, it focuses on capital progress.

Current efficiency

In the course of the 5 years to 31 Could, the belief’s share price has elevated 71% and its internet asset worth’s risen 119%.

This compares favourably to a different FTSE 100 technology-focused belief – Scottish Mortgage Funding Belief – that’s seen its share price rise by 38% throughout this era. Nonetheless, this fund invests closely in unquoted firms, which could be troublesome to worth.

In contrast, a lot of Polar Capital’s progress could be attributed to having positions in every of the ‘Magnificent 7’. On the finish of Could, six of those shares had been within the belief’s prime 10 holdings. Nonetheless, it must be identified that an equal funding in all seven would have generated a return of over 300% since June 2020.

Diversification’s key

Nevertheless it’s smart to have a diversified portfolio. By spreading threat throughout a number of positions, it’s potential to mitigate a number of the volatility that arises from investing within the inventory market.

And that’s one of many benefits of an funding belief. By proudly owning one inventory, an investor could have publicity to a number of firms usually in several jurisdictions.

Nonetheless, though Polar Capital has positions in 98 shares, they’re all in the identical sector. Its supervisor is especially eager on synthetic intelligence (AI). Certainly, it describes itself as an “AI maximalist”.

Additionally, over 30% of its publicity is to the semiconductor business. This might be a priority as a result of historical past tells us that these kind of shares could be unstable. The tech-heavy Nasdaq dropped 75% between March 2000 and October 2002.

My view

However the belief’s at present (27 June) buying and selling at a near-10% low cost to its internet asset worth. In concept, this implies it’s potential to realize publicity to the world’s largest tech shares for lower than their market worth.

Nonetheless, over 70% of its worth comes from North American shares. Right here, there’s nonetheless a major diploma of uncertainty as to how President Trump’s strategy to tariffs will have an effect on the economic system. In response to JP Morgan, there’s a 40% likelihood of a recession this yr. And because of their lofty valuations, a downturn’s prone to have an effect on the tech sector — and the Magnificent 7 particularly — greater than most.

For many who consider know-how shares will proceed to ship over the long run, I believe Polar Capital Know-how Belief’s a share to think about. However solely as a part of a well-diversified portfolio. And anybody taking a place shouldn’t count on to obtain a dividend any time quickly.