HEAD-TO-HEAD: Henderson vs Polar Capital

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The manager of the Henderson fund relies predominantly on bottom-up stock-picking while also adopting thematic views that take advantage of trends in the industry.

Stuart O’Gorman, the fund manager, tends to avoid companies in the initial stage of product development, preferring to wait until their positions within industries have become more clear.

“You can have that initial hype stage and then a trough before the technology really starts to come true again,” said Meakin. “They are looking at slightly later stages, when the winners are more identifiable.”

The Polar Capital team, on the other hand, more often bets on companies in the early stages of the technology cycle. It attempts to identify new disruptive technologies early and finds companies that are best positioned to benefit from them.

The Henderson fund tends to follow its benchmark, the MSCI AC World Information Technology Index. Its active share is 47.3. This approach leads to a portfolio that’s more concentrated in large-cap stocks, which constitute 85% of the holdings, compared with the category average 67.5%.

It also results in a larger exposure to US stocks: 78% compared to the average of 65% for its peers. The fund’s top positions tend to be large. It currently holds 9.5% of its AUM in Alphabet (Google’s parent) and 8.3% in Apple, which still means it is underweight in the company with respect to the index.

The fund held 49 names at the end of June, with almost a third of its AUM in internet software and services. It was underweight in technology hardware and storage.

The Polar Capital fund is index-agnostic. Its strong focus on the earlier stages of the technology cycle means that it tends to invest more in small- and mid-cap stocks, while underweighting large-caps (55%).

It has a lower exposure than Henderson to US stocks (69%) and a higher number of holdings − 68 at the end of June. It held only 6.4% in Apple, half of it as a call option, and 6% in Alphabet.

Both funds have holdings in China’s internet giants Alibaba and Tencent, as well as Samsung Electronics, all three among both funds’ top ten holdings.

Technology is inherently a growth sector. By definition then, both funds fit near the growth end of the value-growth investment style spectrum.

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