Polar Capital Dumps Software Stakes After 22% ETF Plunge, Keeps Microsoft Call Options
Nick Evans, manager of Polar Capital’s $12 billion global technology fund, has liquidated positions in SAP, ServiceNow, Adobe and HubSpot, retaining only a small Microsoft holding plus call options. His software-heavy US ETF benchmark has plunged 22% year-to-date, prompting a portfolio shift into semiconductors, networking equipment, fiber optics and data-center infrastructure names.
1. Portfolio Rebalancing Moves
Nick Evans has exited major application software names including SAP, ServiceNow, Adobe and HubSpot, reflecting his view that AI coding tools threaten traditional software revenue and valuations. Despite strong historical performance—top 1% over one year and 3% over five—he believes disruptive AI will intensify competition and squeeze long-term free cash flow.
2. Microsoft Position and Options Exposure
Evans maintains a minor equity stake in Microsoft and holds call options to retain upside exposure to its AI capabilities without overcommitting to the application software sector. This selective position underscores his cautious stance on software’s terminal value while still recognizing AI growth drivers.
3. Software ETF Decline
The exchange-traded fund tracking US software stocks has fallen 22% so far this year, highlighting investor concerns over AI’s impact on software pricing power and market structure. This sharp decline contrasts with gains in semiconductors and infrastructure sectors benefiting from AI-driven demand.
4. New Sector Allocations
Following the sell-off, seven of the fund’s top ten holdings shifted to semiconductor companies—led by nearly 10% weight in Nvidia—and increased stakes in networking equipment, fiber-optic providers and data-center power and energy infrastructure. This rotation aims to capture growth in hardware and services underpinning AI deployments.