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Rogoff: small firms have most promise in tech sector
Ben Rogoff is to steer his Polar Capital Technology Trust deeper into small company territory as he positions for a new cycle in which the internet is the 'hub of every activity'.
Following a series of conversations with investors, Rogoff said he wanted to tilt the £484 million trust to make it more similar to his popular Polar Capital Global Technology open-ended investment company (Oeic).
Having delivered a return of 2.36% over the 12 months to June, outstripping the FTSE Word's fall of 4.08%, Rogoff said now is the time to tweak the fund's allocation so it can take advantage of the new trends that technology companies are starting to monetise.
Focus on small companies
Rogoff said the sector is moving ever closer to the day when the internet becomes the 'hub' of every activity, and he believes that firms at the cutting edge of this trend will be small firms.
'We have talked for a long time about a new cycle and a move away from the benchmark. That's not to say that it's altered dramatically, but the extent we have built the portfolio around the benchmark has reached its zenith,' Rogoff said.
Even though the fund has outperformed over the year, closed-end technology funds like Rogoff's have not always been popular with investors. The industry's so-called betamax moment can often be a turn-off, critics say, along with stocks' deceptively low price earnings ratios, triggered by the short life cycles of even the most attractive products.
But in the last year the sector has been a hive of activity, with the high profile floats of social networking sites Facebook and LinkedIn generating demand, although these names later became the target of short sellers.
Volatile Facebook better than Google
Rogoff was one of those who bought into Facebook, using weakness following its launch to increase his holdings across his open and closed-end funds. He held the view that while investors cannot be clear about the future direction of the business, they can be certain about its ability to generate a profit.
Rogoff said: 'The basic story is massive... the issue is monetising. The rumour is that [Facebook] is thinking about adding a "want" rather than "like" button to connect with advertisers. It's going to be volatile and nobody really knows what it will look like, but it's moving into areas we had never really thought about. [In comparison] Google is having a harder time.'
The importance of cloud computing, intangible storage that allows the users of devices such as iPads to access files from any computer, is still one of the big themes that Rogoff is backing.
Over the past 20 years the fund manager said that users once sceptical of cloud have come to rely on it, signalling a strong trend likely to continue as well as an indication that companies not part of this movement could struggle to survive.
'We've just scratched the surface of cloud. If you think about it, why can't we use the internet for any service? We are really excited about it. It goes back to the idea of the internet being the hub of all activity,' Rogoff said.
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by Gavin Lumsden on Jan 20, 2017 at 17:01