Prediction: this FTSE 250 trust will outperform Rolls-Royce shares in the next 5 years.

Rolls-Royce (LSE: RR) shares have been relentless in recent times. They are up 441% in two years and 364% over three! But what about the next five years? However, this is where things get a little murkier.

The stock has already fallen sharply to 587p. That doesn’t mean it won’t go up, of course. But it means there are high expectations baked in, with its price-to-earnings (P/E) ratio of 27.

Is the FTSE 100 For an engine manufacturer to miss a beat with its earnings, even slightly, the share price can lose quickly.

Remember, as a Rolls shareholder, I like the direction of the company under CEO Tufan Erginbilgiç. It has attractive opportunities due to expanding global airspace, rising defense budgets, and the long-term capacity of small modular reactors (SMRs).

However, there are some UK stocks that I think are set for high growth over the next five years.

AI boom

One of them Polar Capital Technology Trust Company (LSE: PCT). Granted, this FTSE 250 the technology investment trust is near a record high, its shares up 45% in the past year alone.

But given the focus on technology and the quality of its portfolio, I fully expect many gains to come.

Why? Simply put, we are in the midst of a powerful technological revolution, with rapid advances being made in artificial intelligence (AI). Even the non-tech Footsie blue chips are using AI to improve their performance. For example, AstraZeneca he uses it to identify small cells that could be the next blockbuster drugs.

Polar Capital Technology Trust owns a number of firms that are already benefiting from the rise of AI, including Nvidia again Microsoft. But there are more than just the Magnificent Seven tech stocks. Another top catch Taiwan Semiconductor Manufacturing (TSMC), the world’s leading contract manufacturer.

This year, TSMC is targeting an average growth of 20% in sales, driven by AI chips. And Wall Street expects compound annual revenue growth of 20% through 2029!

Elsewhere in the portfolio, I like the prospects of Cloudflare. This edge computer player is undoubtedly the most important online company that people have never heard of. As of September, 35% of the Fortune 500 were paying customers of Cloudflare.

Trading at a discount

The main risk here is the trust’s focus on technology alone. If this sector were to face a downturn, as it happened in 2022, then the portfolio and the number of shares would not perform well.

Another thing to note is that the shares are currently trading at an 11.2% discount to the fund’s net asset value per share. Although this may be hiding in plain sight, there is no guarantee that the discount will decrease. Indeed, due to the nature of investment trusts, they can always grow.

As I look forward to 2030, I expect the AI ​​revolution to advance and productivity gains to begin translating into increased profit margins for some companies. Even the Labor government is now pinning its hopes on the UK’s growth in technology!

Naturally, there will be periods of volatility ahead, meaning that the share price of an FTSE 250 trust will not rise in a straight line. But I expect it to generate stronger returns than Rolls-Royce over the next five years. I think it’s worth considering.