The Motley Fool

Forget a cash ISA! I reckon these 2 investment trusts will work your money much harder

The content of this article was relevant at the time of publishing. Circumstances change continuously and caution should therefore be exercised when relying upon any content contained within this article.

Arrowings ascending on a chalkboard
Image source: Getty Images.

The average cash ISA pays interest of just 1.5%. Surely you can get a better return on your money? Why, yes you can.

Ice cool

The two investments I’m looking at here are somewhat different to a cash ISA. They spread your money across a range of UK and global stocks in the red hot technology sector, making them high-risk, high-return vehicles.

One Killer Stock For The Cybersecurity Surge

Cybersecurity is surging, with experts predicting that the cybersecurity market will reach US$366 billion by 2028more than double what it is today!

And with that kind of growth, this North American company stands to be the biggest winner.

Because their patented “self-repairing” technology is changing the cybersecurity landscape as we know it…

We think it has the potential to become the next famous tech success story. In fact, we think it could become as big… or even BIGGER than Shopify.

Click here to see how you can uncover the name of this North American stock that’s taking over Silicon Valley, one device at a time…

The first, Polar Capital Technology Trust (LSE: PCT) invests in a portfolio of global technology companies and is big enough to be quoted on the FTSE 250 index. It was launched in December 1996, just as the dotcom boom was picking up speed, and survived the bust in 2000.

Capital idea

Today it announced its results for the six months to 31 October which showed an 8.5% rise in total net to £1.68bn, with the share price up 7% in the period, adjusted for sterling. The weak pound worked in its favour here because in local currency terms it was down 0.7%, although it still beat the FTSE World index over this turbulent period, which fell 3%.

However, Polar Capital Technology Trust has a good long-term track record and will suit those who still believe in the big US and Chinese tech giants, as its top 10 holdings include Google-owner Alphabet, Apple, Microsoft, Facebook, Alibaba and Tencent, a roll call of the big names in technology. The fund has grown a whopping 149% over five years, against 5% for the FTSE 100. My worry is that the US tech surge could be drawing to a close, and the trust is down 11% in the last six months. Nothing lasts forever.

I am therefore wary despite a low annual charge of 1% and discount of 6.45%. There is no dividend. This could be a case of right fund, wrong time. Unless I’m wrong and the technology bull run has further to go.

British tech

Herald Investment Trust (LSE: HRI) invests in quoted small and mid-cap technology, communications and media companies and has a great track record since launch in 1994, turning an initial £1,000 investment into £14,000.

With so many technology funds focusing on the US it is a novelty to see this one has 52% exposure to the UK, with only 24% in the States plus a smattering in Asia-Pacific and international equities. It has an annual charge of 1% but again, no dividend.

Hark the Herald IT

Herald has underperformed US tech-focused trusts as a result, although a return of 62% over five years looks good against just 27% on the FTSE All Share. Its top holdings are less familiar than Polar’s, with names such as GB Group, Diploma and Craneware, although you may know Boingo Wireless, IQE and M&C Saatchi.

The trust has total assets of £927m and currently trades at a massive discount of 19% to net asset value, which suggests to me investors are wary of this sector at the moment. This trust is at the riskier end and you also have to factor in Brexit, I suppose. It could do well if the UK bounces back next year, though.

One Killer Stock For The Cybersecurity Surge

Cybersecurity is surging, with experts predicting that the cybersecurity market will reach US$366 billion by 2028more than double what it is today!

And with that kind of growth, this North American company stands to be the biggest winner.

Because their patented “self-repairing” technology is changing the cybersecurity landscape as we know it…

We think it has the potential to become the next famous tech success story.

In fact, we think it could become as big… or even BIGGER than Shopify.

Click here to see how you can uncover the name of this North American stock that’s taking over Silicon Valley, one device at a time…

Harvey Jones does not hold shares in these two investment trusts. John Mackey, CEO of Whole Foods Market, an Amazon subsidiary, 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. harveyj has no position in any of the shares mentioned. The Motley Fool UK owns shares of and has recommended Amazon, Apple, and Facebook. The Motley Fool UK owns shares of Microsoft and has the following options: long January 2020 $150 calls on Apple and short January 2020 $155 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.

Our 6 'Best Buys Now' Shares

Renowned stock-picker Mark Rogers and his analyst team at The Motley Fool UK have named 6 shares that they believe UK investors should consider buying NOW.

So if you’re looking for more stock ideas to try and best position your portfolio today, then it might be a good day for you. Because we're offering a full 33% off your first year of membership to our flagship share-tipping service, backed by our 'no quibbles' 30-day subscription fee refund guarantee.

Simply click below to discover how you can take advantage of this.