Much has been written about how global stock markets are heavily weighted towards the US technology giants. This status quo makes it difficult to balance your portfolio’s technology exposure – funds that are meant to serve different purposes often end up investing in many of the same companies.
On the other hand, the sector has been delivering outstanding growth for a number of years, and investors who avoid it risk missing out on some cutting-edge businesses and serious returns. There are also a lot of promising, smaller technology companies that don’t feature quite as prominently in global indices.
So dedicated technology exposure is well worth considering for adventurous investors. And investment trusts offer some attractive options in that regard.
Battle of the giants
There are two ‘pure’ tech trusts: Polar Capital Technology (PCT) and Allianz Technology (ATT). Both invest in listed companies within the technology sector, and are very big and liquid themselves, with market caps of £6bn and £1.9bn, respectively. As you would expect, both have delivered phenomenal returns in the past decade in absolute terms, even though beating an index tracking the concentrated tech sector has proved difficult at times.
As the chart below suggests, the two trusts perform similarly, but the Polar trust has done much better this year. In the past decade, both have grown shareholders’ money more than nine times over.
The two portfolios have some similarities, starting with significant exposure to the ‘Magnificent Seven’ US stocks – meaning that, as suggested above, you do have to be careful with how they interact with the regular global equity portion of your portfolio. As the chart below suggests, you may find yourself owning a lot more Nvidia (US:NVDA) than you think.
Having said that, there are differences. The Allianz portfolio is more concentrated, with 48 holdings and a c90 per cent exposure to US companies, with the rest in the Asia Pacific region. The top 10 holdings account for about 60 per cent of the portfolio.
The Polar Capital fund, meanwhile, is significantly broader at 98 holdings, with less than half its assets held in the top 10. It also has less than 70 per cent of the portfolio in North America. The rest is split evenly between Asia Pacific companies on the one hand and Europe, the UK and Japan on the other. So in practice, while US tech will be the driving force behind both portfolios, you get a little more variety with Polar Capital.
This additional diversification is a key reason why Mick Gilligan, head of managed portfolio services at Killik & Co, has a preference for the Polar trust.
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“AI has the potential to disrupt the technology landscape in ways that are not yet clear. Picking winners and losers is very challenging, in my view,” he says. “So there is a strong case for holding a broadly diversified basket of technology stocks rather than trying to hand-pick possible winners.”
Richard Williams, senior analyst at QuotedData, adds: “[Polar Capital Technology] has a far greater exposure to mid-cap hardware names that are benefiting from the hyperscalers’ huge capex budgets.”
He also likes the managers’ willingness to “get creative”, a recent example being the purchase of construction equipment manufacturer Caterpillar (US:CAT), “one of the least traditional tech names [the trust] has ever owned”, as he puts it.
“It was early to the party here, recognising that the company’s industrial generators would provide a solution to a lack of supply of turbines to power data centres,” Williams explains.
The trusts currently trade at similar discounts to net asset value (NAV) – as at 9 April, this discount was 7.5 per cent for Polar Capital and 7.8 per cent for Allianz. The former is slightly more expensive, with an ongoing charge of 0.77 per cent, against 0.62 per cent for Allianz Technology.
More mixed alternatives
Both Allianz and Polar Capital focus specifically on listed technology companies. There are a few other investment trusts that approach the sector differently and which can also be an attractive way for investors to get exposure.
One is Scottish Mortgage (SMT). The trust is not technically a technology play, but more accurately a global equity trust with a focus on high-growth companies across a range of sectors. However, in practice ‘high-growth’ often means that tech innovation is involved, and technology companies made up about a third of the portfolio as at last September.
Scottish Mortgage’s distinguishing feature is its exposure to private companies – the managers like to boast that they hold six of the 10 most valuable private companies in the world. At the top of the list is SpaceX, which has grown so much and so fast that it now accounts for nearly a fifth of the portfolio. The company is due to list later this year, but it remains to be seen whether market conditions actually allow this to happen.
The trust’s total private exposure was 41.6 per cent as at the end of March, well above its stated limit of 30 per cent. This was partly the result of SpaceX’s rapid growth; the trust’s shareholders have just approved a proposal to let the manager invest up to £250mn more in private companies, which wouldn’t previously have been allowed by the investment policy once the 30 per cent limit was breached.
Scottish Mortgage’s portfolio looks pretty different from that of a global tracker. On the listed side of the portfolio, its largest holding, at 5.7 per cent of the total, is Taiwanese chipmaker TSMC (TW:2330), in which the two dedicated tech trusts also hold big positions, and which also features in the top 10 of the MSCI All-Country World index. But then you have a 4 per cent position in online marketplace Mercado Libre (US:MELI), which is considered ‘the Amazon of Latin America’, 3.6 per cent in Amazon (US:AMZN) itself, and 3.2 per cent in European chip manufacturing equipment company ASML (NL:ASML).
Arguably, all of the above make Scottish Mortgage a broader and more distinctive option than Polar Capital Technology or Allianz Technology – if a less strictly technology-focused one.
Another way to invest in technology companies that are not already covered by a simple global tracker is to look at trusts investing exclusively in private companies.
The growth capital trust sector is a good place to start if you are happy to own something potentially quite risky and volatile; the underlying companies are relatively early-stage and not always profitable. There are only three trusts left in the sector that are not in the process of winding down: Schiehallion (MNTN), Molten Ventures (GROW) and Seraphim Space (SSIT).
We looked at the trio in more detail earlier this month (‘Growth capital survivors eye the space race’, IC, 2 April), but all of them have significant exposure to the technology sector. In a nutshell, Seraphim is all about space tech; Schiehallion holds a range of high-profile companies, including SpaceX, TikTok owner ByteDance and AI company Anthropic; and Molten Ventures is a more diversified (and currently cheaper) trust, investing across a range of sectors including fintech, software, AI, and health and wellness.
Still on the unquoted side, private equity trusts are another sector with technology exposure. However, their mixed fortunes in 2026 emphasise that not all technology companies are the same.
At the start of this year, concerns over the impact of AI on the business models of software companies sparked a sell-off – both of the listed companies operating within the sector itself, and of the shares of the private equity houses that have bought up a lot of unquoted software businesses in the past few years.
With that in mind, there are, broadly speaking, two types of private equity trusts: those that invest directly in a handful of private companies, and those that are broader and more diversified, including investing in other private equity funds. Within the second group, HarbourVest Global Private Equity (HVPE) and Pantheon International (PIN) both have about a third of their portfolios in the tech sector, while Patria Private Equity (PPET), which is more Europe-focused, has about a quarter.
Among the direct private equity trusts, HgCapital Trust (HGT) focuses on software companies specifically, and it was the hardest hit in the February sell-off. Its shares are down by about a quarter in 2026, partly also because its biggest holding, Norwegian software company Visma, has had to delay its planned IPO as a result of investor nervousness.
Oakley Capital (OCI) is another direct private equity trust with technology exposure – more than half of its portfolio is split between tech and what it classifies as ‘business services’ companies, which often also have a strong tech component. HgCapital and Oakley are the best performing private equity trusts in the sector on a 10-year basis after 3i Group (III), but HgCapital’s five-year record now looks much less flattering.
Finally, a quick mention of Herald (HRI), which invests in smaller quoted technology and communications companies. This is in theory quite an interesting and unusual way to add tech exposure to your portfolio, particularly because the trust has tended to have significant exposure to the UK, and much less in the US than your usual tech fund. However, the trust has been targeted by activist Saba Capital and, as mentioned, there’s a decent chance it might end up being liquidated.
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