In an episode from the final series of the US sitcom Friends, Joey Tribbiani exaggeratedly struggles learning how to speak French in preparation for an audition for a character called Claude.
Recently, it’s been stock markets that have struggled with Claude. In this case, Claude is the family of large language models (LLMs) from Anthropic, the generative artificial intelligence start-up launched by former OpenAI engineers.
Anthropic followed the launch of Claude CoWork, a more user-friendly version of Claude Code, with a plug-in that helps automate a swathe of routine legal and compliance tasks. Investors reacted by marking down the shares of companies with legal-related applications. The UK’s Relx and Sage, Netherlands’ Wolters Kluwer and America’s LegalZoom are down anywhere from 38% to 58% from their most recent highs (at the time of writing on 2 March 2026).
It’s not just the legal niche that has come under pressure, though. Extrapolating the potential of this plug-in to other sectors could be catastrophic for all companies whose moat is centred on data analytics, no matter how proprietary. London Stock Exchange Group, Intuit and S&P Global are just a trio of other names caught in the crossfire.
The iShares Expanded Tech-Software Sector ETF, which includes Microsoft, Palantir and Oracle as top holdings, down circa 9% in the past month, taking losses to circa 30% since peaking in September.
The investment trust sector has hardly been immune. The most striking impact came on HgCapital (HGT), a private equity trust specialising in software, which initially fell as much as 25%.
HGT’s largest holding is Visma, which provides payroll, HR and accounting software products for more than 2.2m customers in 28 countries. Aside from the potential disruption AI could have on Visma, the company had also been set for an IPO in the first quarter of 2026. That now looks likely to be delayed, at least until the software slump in public markets has abated.
Some analysts downgraded HGT because of these factors, and there will undoubtedly be a negative impact on the net asset value (NAV) in the short term, but the dramatic widening of HGT’s discount to circa 30% (it was trading around par as recently as May) seems overdone.
We were heartened to see HGT’s directors buying shares on 6 February 2026, while Jupiter Fund Management and Valhalla Ventures, the holding company of Preqin founder Mark O’Hare, increased their holdings in the trust to circa 5.5% and 7.2% respectively, suggesting confidence in HGT’s long-term investment case.
The two biggest trusts in the technology sector have had differing fortunes since the news. Allianz Technology Trust (ATT) is down circa 5.5% in the past month, extending losses since its recent high to circa 7.2%. Polar Capital Technology (PCT) meanwhile is essentially flat over one month.
ATT and PCT’s share prices have generally tracked each other pretty well over the past five years, but PCT has pulled ahead since last June. Should ATT catch up, this could provide an opportunity for investors, particularly if the discount narrows.
Manager Mike Seidenberg reduced ATT’s exposure to software companies through 2025, which helped the trust to outperform over the year (ATT’s NAV was more than 400 basis points ahead of its benchmark in 2025).
Seidenberg is starting to look at software companies once more. He suspects that the current fear that many of these companies will be put out of business by AI is just plain wrong. Yet, he remains conscious of catching the proverbial falling knife – selectivity and timing will be key here.
Still, after a few years during which the Magnificent Seven outperformed and made active management difficult, AI-related disruption risk means that stock-picking will be required to outperform again. In this sense, a specialist trust such as ATT with a bias towards mid-cap tech could become attractive, particularly trading on a seemingly attractive discount in the region of 8%.
In the Friends episode, Joey’s French language strife starts when pal Phoebe Buffay asks him to repeat whole lines, such as je m’appelle Claude, back to her. Yet, Phoebe’s brief moment of success came when she broke that sentence down syllable-by-syllable.
Similarly, we suspect that investors taking a broad, market capitalisation index-led approach to investing in software, and technology more broadly, are at risk of having their investment eaten by other AI enhancements, whether they’re from Claude or elsewhere.
Specialists that are embedded in the software and technology ecosystem, such as HGT and ATT, can break the universe down stock-by-stock, get ahead of the game and potentially benefit from buying the dip. They are less likely than their passive-favouring peers to be exclaiming oh, mon dieu (or, in Joey’s failed French, oh, de foof).
David Brenchley is an investment specialist at Kepler Trust Intelligence. The views expressed above should not be taken as investment advice.