Despite this, I’m always on the lookout for alternative investment opportunities that may offer more growth. After all, SMT already had assets of £21bn at the end of June. Here’s another fund I think might be worth considering.

Tech-focused trust

With ‘only’ £3.3bn in assets, the Polar Capital Technology Trust (LSE: PCT) is nowhere near as big as SMT. However, it does have exposure to quite a few of the same stocks. These include online retail giants Amazon and Alibaba, Chinese internet titan Tencent, food delivery firm Delivery Hero and semi-conductor giant ASML. In addition to this, PCT also holds many of the usual suspects: Microsoft, Apple, Alphabet (Google) and Facebook.

As you might expect, PCT’s recent performance has been solid. Its share price is up 17% since July 2020. However, it’s the ascent of the share price over the longer term that shows just how lucrative big tech stocks have been for investors. Since 2016, the stock’s rocketed 238%! That’s a fine result, even though it lags the 357% achieved by the Scottish Mortgage Investment Trust. This difference may be partly due to the latter’s holding in Tesla, which PCT doesn’t own. 

Whether this performance will continue is another thing entirely, of course.

“Extraordinary times”

In today’s full-year results, PCT’s chair, Sarah Bates, was understandably bullish on the technology sector going forward. In addition to highlighting the “explosion” in cloud computing, Bates also said that more established companies were now showing evidence of their ability to move into new, exciting areas, such as electric vehicles. 

Even so, Bates cautioned that we were in “extraordinary times without much of a road map.” In addition to fresh worries over inflation, she warned that the “valuation gap between ‘growth’ and ‘value’ sectors has become very stretched.” 

These are important considerations for holders of any tech fund, in my view. As an investor, I suspect the near-term outlook may indeed be tough, due to those high valuations. As vaccination programmes progress, it’s last year’s biggest losers that will likely be 2021/22’s biggest winners. Think airlines, holiday firms and hospitality companies. The threat of increased regulation shouldn’t be ignored either. 

SMT vs PCT

Is one of these trusts better than the other? Based on gains so far, yes. However, past performance is no guide to the future. Moreover, both trusts clearly have a focus on ‘disruptive’ technologies that I’m looking to get exposure to.

Notwithstanding this, Scottish Mortgage Investment Trust is the clear winner on fees, at just 0.34%. For exposure to some of the world’s most exciting public (and private) companies, that looks great value. PCT charges 0.93%. On the flip side, the forthcoming departure of long-standing co-manager James Anderson may have unsettled some owners.

Happy holder

As a holder of Scottish Mortgage Investment Trust, I’m happy to stay invested and continue drip-feeding my money in. Despite this, I think PCT may be considered as a suitable alternative, especially if I grow frustrated by the antics of Elon Musk.

I rate both trusts as ‘buys‘ for my own risk-tolerant portfolio.

The post Scottish Mortgage Investment Trust: is this tech fund a better buy? appeared first on The Twelfth Magpie.

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John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, is a member of The Motley Fool’s board of directors. Suzanne Frey, an executive at Alphabet, is a member of The Motley Fool’s board of directors. Teresa Kersten, an employee of LinkedIn, a Microsoft subsidiary, is a member of The Motley Fool’s board of directors. Randi Zuckerberg, a former director of market development and spokeswoman for Facebook and sister to its CEO, Mark Zuckerberg, is a member of The Motley Fool's board of directors. Paul Summers owns shares in Scottish Mortgage Investment Trust. The Motley Fool UK owns shares of and has recommended Alibaba Group Holding Ltd., Alphabet (A shares), Alphabet (C shares), Amazon, Apple, Facebook, Microsoft, and Tesla. The Motley Fool UK has recommended ASML Holding and has recommended the following options: long January 2022 $1,920 calls on Amazon, long March 2023 $120 calls on Apple, short January 2022 $1,940 calls on Amazon, and short March 2023 $130 calls on Apple. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

The good news is that some of them have been around for 100 years or more, so they have a lengthy record for investors to consider before buying. 

One that has recently popped up on my radar is the Value and Income Trust (LSE: VIN), which has a unique investment approach. 

A unique approach

Unlike other funds, Value and Income invests in both shares and property directly and has been successful with this strategy for over 30 years. 

Set up in 1986, over the past 31 years the investment trust has grown its net asset value from 44p per share at inception, to 356p today, a compound annual growth rate of 7.2%. Including dividends the trust has returned 7.6% per anum over this period, smashing the FTSE All Share’s return of 4.7% per annum. 

These steady, market-beating returns show that Value and Income’s strategy works but today, shares in the trust are on special offer. At the end of September, the net asset value was reported at 356p per share, so at current levels, the shares are trading at a discount to NAV of 23%. 

As well as the discounted valuation, the shares support a dividend yield of 4.1%. So, if you’re looking for an undervalued investment trust with a proven record of creating value for investors, this one ticks all the boxes. 

An investment in the future

Value and Income is a defensive trust with an impressive record but if you’re looking for something with a bit more risk, and a bet on future technologies, Polar Capital Technology Trust (LSE: PCT) might be for you. 

Over the past five years, shares in Polar Capital have gained a little over 200% as it has benefitted from the global tech boom. And today, the company announced yet another strong portfolio performance for the six months to the end of October. In the period, it reported a 19% rise in its NAV per share, outperforming its benchmark, the Dow Jones World Technology Index by 2%. 

According to management, gains came from companies benefitting from growth in payments (PayPal Holdings Inc), robotics (Cognex Corp) and iPhone content (Universal Display Corp). 

Unfortunately, while Polar Capital is a great way to play future trends, high demand means that it trades at a slight premium of 0.5% to NAV. No dividend is offered, but with such a strong capital performance over the past five years, arguably income is not necessary. 

Since the beginning of 2014, it has produced a total capital return of 731% for investors. Over the same period, the FTSE 100 has returned only 70% — it’s hard to ignore this scale of outperformance. 

If you’re looking to invest in the technology of the future, with a fund that has a proven record of beating the market, Polar Capital might be the company for you. 

The post 2 cheap growth investment trusts I’d buy and hold for 25 years appeared first on The Twelfth Magpie.

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Rupert Hargreaves owns no share mentioned. The Motley Fool UK owns shares of and has recommended PayPal Holdings. The Motley Fool UK has recommended Hargreaves Lansdown. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.