Signs of Optimism

Last week saw rises of +9.5% in the Polar Capital Technology Trust and +9.1% for the Scottish Mortgage Investment Trust, two of the holdings in the Irongate Bespoke Global Equity Portfolio. These two long term holdings have suffered the most over the year so far and are still down -23% and -37% respectively, but importantly have risen from their lows in mid June by +18% in the case of Polar Capital and +23% for Scottish Mortgage. Over five years Polar Capital’s trust is up 102% and Scottish Mortgage 108%.

It is still too early to say whether we are out of the woods yet. The current fall in markets is already consistent with the average non recessionary Bear market but as I outlined in last week’s newsletter, we could see a further drop of around 10% if we fall into recession, something the Fed is determined to avoid.

Ben Rogoff, manager of the Polar Capital Technology Trust, feels that technology valuations have already priced in recessionary fears and as such he has started to rebuild exposure to higher growth stocks whilst maintaining a modest put position on the Nasdaq.

In his annual report, Ben Rogoff goes on to state that it is easy to forget how good the long-term technology story is. The ten largest technology stocks in the S&P 500 index accounted for 29% of the index earnings to year end. These ten stocks dominate the index because of their earnings progress and not because of outlandish valuations.  

“Technology is the handmaiden to productivity improvement and so long as the sector can continue to help the economy become more productive and create economic value, we expect value to continue to accrue to equity holders in the most impactful companies enabling this change.” Ben Rogoff (Annual Report 2022)

The value of an investment can go down as well as up.

You may get back less than you invested.

Past performance is not a reliable guide to future performance.

The opinions expressed are those of Irongate, this material is not a recommendation, or intended to be relied upon as a forecast.‍