The trust was hurt by its higher weighting in small and medium sized stocks and underperformed its benchmark for the year to 30 April. The Dow Jones World Technology index rose 13.1% over the year, while the trust’s net asset value rose 11.2%. However, in aggregate, technology still outperformed the wider FTSE World Index, which delivered just 6.8%.

Performance in the first half was driven by smaller and growth-focused companies as markets moved away from defensives. In contrast, the final months of the year saw large-caps outperform, such as Apple, Hewlett-Packard and Microsoft, on the back of both strong results and rapid profit-taking in the sector.

The group dismissed fears of a second technology bubble: “To those who claim the current de-rating process represents the bursting of “another tech bubble” we (politely) suggest they re-examine the facts, rather than to lean lazily on an intellectually beguiling but ultimately fallacious parallel between today and the late 1990s. In terms of overall technology valuations, there is clearly no case to make as the sector today accounts for c. 19% of S&P500 market capitalisation and earnings, in contrast to 35% and < 15% respectively at the March 2000 highs."

Polar admitted IT budgets remain weak, expanding at just 0.4% year on year, compared to expectations of 3-4% and that there continue to be concerns over smartphone stocks such as Apple, where developed market growth is weakening and competition is increasing, but argues that parts of the technology market are in good shape: “Next-generation companies largely delivered ahead of expectations. Cloud computing – the backbone of our new cycle thesis – continued to gain momentum, following the pivotal decision by Adobe to shift to a software-as-a-service (SaaS) model, and the CIA awarding a $600m infrastructure deal to Amazon, rather than IBM. Internet stocks were among the strongest performers during the year, led by a resurgent Facebook having initially disappointed investors during its debut year.”

The technology sector is currently trading on 15.1x next twelve months earnings, broadly in line with longer term averages. Polar says it has been surprised by the weakness of high growth technology stocks because fundamentals for next generation stocks remain strong, adding, “high growth, disruptive technology companies addressing large market opportunities rarely trade cheaply, particularly when they are investing for growth.”

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The trust continues to focus on three core themes: Internet infrastructure, broadband applications and mobility, with ‘big data’ playing an increasingly supportive role. The trust is up 170% over the past five years, and currently trades at a discount to net asset value of 3.95%.