The revival of technology investment trusts

At first glance, London’s largest dedicated technology trusts aren't overexposed to the fabled 'Magnificant Seven' stocks that dominated the US market last year.

Open-ended funds can only hold 10 per cent in a single company, meaning they must underweight the megacap companies that sit at the top of global tech indices. Both Allianz Technology Trust (ATT) and Polar Capital Technology (PCT), by contrast, can hold up to 15 per cent in a single stock, yet both are underweight the sector behemoths relative to their benchmark. The runaway success of the Magnificent Seven means neither fund managed to outperform the Dow Jones Global Technology Index in the past 12 months. 

This goes some way towards explaining why the Association of Investment Companies' technology sector trades on a weighted average discount of 12.4 per cent. The other factor is, of course, high interest rates – which famously diminish risk appetites.