Image source: Getty Images
I’ve got no complaints about the Scottish Mortgage (LSE: SMT) share price. It’s done well over the last year, climbing 36%. I bought it roughly two years ago, and I’m sitting on a gain of almost 60%.
I’ve no plans to sell the FTSE 100-listed investment trust, which “aims to identify, own and support the world’s most exceptional growth companies”. It gives me access to Elon Musk’s Space Exploration Technologies, which is privately owned, as well as big tech names such as Amazon, the Taiwan Semiconductor Manufacturing Company (TSMC), Meta Platforms and Nvidia.
I accept it comes with risks. During the 2022 tech stock sell off, Scottish Mortgage shares crashed by half. And if the S&P 500 or Nasdaq take a beating, as they will at some point, so will Scottish Mortgage.
A tale of two tech trusts
But I was looking at the FTSE 100 performance tables when I spotted another investment trust I considered buying yonks ago, then forgot about: Polar Capital Technology Trust (LSE: PCT). This was the go-to collective investment vehicle for independent financial advisers, in the days when I used to talk to them a lot, when writing for other financial titles.
And while I wouldn’t have touched many of their recommendations with a barge pole, this one’s done brilliantly.
Polar Capital Technology isn’t hugely different from Scottish Mortgage. Its aim is to “maximise capital growth for shareholders through investment in a broadly diversified portfolio of technology stocks around the world”.
Shining FTSE 100 star
Unsurprisingly, it features many of the same names. Nvidia’s now top holding at 12.5% of the entire portfolio, with Microsoft, Meta, Broadcom and TSMC completing the top five. Apple‘s also in the mixer, as the seventh biggest holding.
I know we shouldn’t take past performance too seriously, but Polar Capital’s outstripped Scottish Mortgage on every recent timeframe, as my table shows.
| Trust | 1 week | 3 months | 6 months | 1 year | 2 years | 3 years | 5 years |
| Scottish Mortgage | 1.65% | 10.97% | 15.48% | 36.94% | 62.21% | 30.59% | 18.54% |
| Polar Capital | 5.16% | 22.61% | 35.99% | 44.97% | 84.73% | 101.69% | 102.67% |
The difference is massive. Especially over a five-year view, where Scottish Mortgage has done particularly badly, growing just over 18%, whereas Polar Capital will have doubled an investor’s money.
Polar Capital Technology’s red hot
Looking at these numbers, I appear to have backed the wrong horse. I’m clearly not the only one, as Scottish Mortgage is the bigger trust, with almost £15bn worth of assets under management, against £5.4bn for Polar.
So what can I read into that? The simplistic (but entirely reasonable) answer is that Polar Capital’s better at stock picking than Scottish Mortgage. It’s also less volatile. That doesn’t mean it would survive a tech sell-off. Yet it’s been more stable than Scottish Mortgage.
Despite Polar Capital’s superior performance, it isn’t any more expensive. Both trade at a discount of around 9% to underlying net asset value.
Scottish Mortgage has done well for me, but Polar Capital would have done better. Much better. That’s no guarantee it will continue its wining streak, but I’d argue that investors considering a tech trust today shouldn’t just make a beeline for the better-known Scottish Mortgage. Polar deserves to come in from the (relative) cold.
