A look at the big beasts of the S&P 500 gives a pretty clear impression of how a tech fund might have fared so far this year. All the Magnificent Seven stocks are down year to date for 2025 as at 28 April, ranging from a 6 per cent loss (in US dollar terms) for Meta (US:META) to falls of 16 per cent for Apple (US:AAPL), 19 per cent for Nvidia (US:NVDA) and 29 per cent for Tesla (US:TSLA). Anyone who has loaded up on such stocks is in for some pain, at least in the short term.
So it is for the best-known dedicated tech funds. Shares in Polar Capital Technology (PCT) are off by 17.5 per cent, versus falls of 17.3 per cent for the L&G Global Technology Index fund and 16.4 per cent for Allianz Technology (ATT). That compares with a 6 per cent loss for the S&P 500.
Investors with a long-term view may well have spotted some bargains amid these drops, and it’s worth noting that shares in both ATT and PCT trade at discounts of more than 10 per cent to portfolio net asset value (NAV). But we can also look further back for more evidence of how the biggest tech funds have fared in different periods, and how their portfolios differ.
Looking at the two trusts alone, Allianz has had a good showing in recent times. It beats the Polar Capital fund over five years (in part thanks to a phenomenal 2020), and the two are roughly even over three years. A problem, however, is that both lag the L&G tracker fund mentioned earlier over these periods, and have not managed to outperform it in the volatile recent months either.
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What’s the driver behind this? In the longer run, in keeping with the issues facing active managers investing in the US or global stock markets in general, one issue is simply about position sizes. The index tracked by the L&G fund has 16.7 per cent in Apple, 14.4 per cent in Microsoft (US:MSFT) and 12.8 per cent in Nvidia. These are bigger than many risk management rules of thumb permit: Allianz trust only has one position amounting to more than 10 per cent of assets (in Apple), while all of PCT’s holdings fall under that threshold.
The active funds therefore act as a more moderate play on the sector, although they still have big bets on some of the most prominent names. The five biggest holdings in ATT, accounting for 37.3 per cent of assets, are all members of the Magnificent Seven. PCT’s top four positions, making up 28.2 per cent of the fund, are also in this group. That, in part, explains why these trusts can have such big ups and downs, from enormous gains in 2020 to sharp falls in 2022 and, so far, in 2025.
We can also discern other nuances of these funds. PCT’s portfolio exposure is broken down by subsector. Semiconductors and semiconductor equipment make up almost a third of the portfolio, with software on 18.6 per cent and interactive media and services on 12.9 per cent.
ATT is less specific here. The fund has tended to gain plaudits for its focus on tech stocks further down the market cap spectrum and for hunting beyond the very biggest names. But, as mentioned above, it does still have a substantial exposure to the Magnificent Seven.
