Fund Profile

Disclaimer

Disclosure – Non-Independent Marketing Communication

This is a non-independent marketing communication commissioned by Allianz Technology Trust. The report has not been prepared in accordance with legal requirements designed to promote the independence of investment research and is not subject to any prohibition on the dealing ahead of the dissemination of investment research.

Overview
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Overview

The technology sector encompasses an ever-wider range of businesses, but many of them are united by their growth ambitions. For investors wanting exposure to this growth, Allianz Technology Trust (ATT) represents a very actively managed specialist investment trust, managed by one of the most experienced technology investment teams in the world, which has delivered excellent returns over the years.

The team seek to identify areas of 'innovative disruption' and invest in the businesses best placed to exploit it. At any one time, the portfolio comprises between 50 and 70 stocks, currently at the high end of that range at 70. We caught up with Walter Price, manager of the trust, recently to discuss current positioning.

Walter’s biggest theme in the portfolio is to cloud and SaaS businesses, which together amount to around 40-50% of the portfolio (including Microsoft, Google and Amazon), but mainly represented by holdings in 15 or 20 mid-cap cloud software companies. In Walter’s view, 2019 is the best environment we have so far seen for selling cloud software, with many companies set to achieve exceptionally strong sales and earnings growth.

The mandate for ATT is very flexible, and the team seek to ensure that the portfolio always reflects their views on the technology market at any one time, with very little regard to benchmark weightings. At times, this positioning has been reflected by a significant proportion of the portfolio being in mega-cap stocks, but at other times (such as now) it is invested more heavily in mid-caps. Currently, this means ATT is differentiated to Polar Capital Technology Trust as well as the benchmark, which both have a much higher weighting to mega-cap stocks.

The performance so far in 2019 represents a strong rebound from the volatility of Q4 2018. Walter’s exposure to mid-cap stocks - upped markedly since early 2018 - has meant that ATT has been in a strong position to perform so far in 2019. Over twelve months to 11th March 2019, ATT is up 12.2%, against the benchmark return (in GBP) of 5.6% and Polar Capital Technology Trust (PCT)’s return of 9.4%.

As it is currently positioned, the portfolio now offers, according to Allianz Global Investors' (AllianzGI’s) estimates, a 3-5 year EPS growth estimate of 32% against 16% for the benchmark. Manager Walter Price is mindful of valuations, and whilst the portfolio is expensive on a forward P/E of 34.7 x, the realised PEG (or PE to Growth) ratio will be lower than the benchmark in the year ahead.

Walter and his team believe technology companies are better equipped than many other sectors to achieve growth irrespective of the market or economic backdrop. The focus on smaller, more innovative companies operating in a niche should, they hope, enable them to ride out what they accept is a possibly difficult year ahead.

Kepler View

There are relatively few specialist technology funds in the UK trust and OEIC universe, but ATT has outperformed the vast majority of them over many time periods. We believe this is thanks to the team’s flexible stock picking approach and focus on seeking to identify areas of 'innovative disruption', and invest in what they see as the next 'mega cap' businesses. However, one can’t discount the advantage it has of the management team being based in the midst of 'the action' in San Francisco.

Historically, ATT has traded on a wider discount than its closest listed peer, PCT. This picture has reversed since the start of 2018, with ATT trading at a premium to PCT over the period, and over one year the average discount for ATT has been -0.1%, whilst PCT has traded at an average discount of -3.5%. In our view, this reflects the stronger performance and active stock picking employed by the AllianzGI team and should ATT trade on a discount to PCT, this could be viewed as an opportunity.

The team’s active investment process, flexibility and high-conviction approach has delivered considerable value over the last ten+ years the team have had the mandate. The portfolio is tilted towards the 'high growth' beneficiaries of the continued move towards the cloud, which Walter sees as niche and which has uniquely attractive opportunities.

BULL
BEAR
Active stock picking in a specialist area
High P/E relative to market could offer little protection in prolonged market drawdown
Team has delivered strong historic growth, and past three years have been particularly strong on a relative basis
Share price rating relative to NAV could suffer if sentiment falls
Simple, flexible mandate and highly incentivised team
Relatively high KID RIY
Continue to Portfolio
2022 Kepler Growth Rated Fund

This trust has been awarded a rating by Kepler Trust Intelligence for growth... Find out more

Fund History

22 Jun 2022 Spider's web
We outline our new quantitative system for mapping the crucial performance characteristics of investment trusts…
25 Mar 2022 Slides and Audio: Allianz Technology Trust
Download the presentation and listen to the audio from our 'Ideas for your ISA' virtual Spring event on 17 March...
23 Mar 2022 Fifteen ideas for your ISA
Slides and audio from our event last week, featuring fund managers running money in every major market in the world...
23 Feb 2022 Regime change
Ahead of our spring conference, we ask whether investors need to junk their portfolios and start again…
09 Feb 2022 Fund Analysis
Despite ATT’s strong long-term performance, it trades at an attractive discount…
14 Jul 2021 Fund Analysis
ATT's active approach means current discount could offer opportunity…
30 Jun 2021 Inflation – a real threat or hot air?
Two of our analysts ask whether recent high inflation numbers indicate something long-lasting and troubling is happening…
22 Apr 2021 FAANGs for the memories
The massive outperformance of mega-cap tech last year could become a thing of the past if anti-trust legislation and negative sentiment starts to bite...
31 Mar 2021 East End boys and West End girls
Our analysts debate whether the US or Asian stock markets will deliver the best returns over the next decade…
24 Mar 2021 Shoot to Thrill: ISA targets for long term growth
We all intend to invest for the long-term but can often be distracted by the news...
10 Mar 2021 Spring Conference '21
Audio and presentations from 21 of the UK’s leading investment trust managers…
04 Mar 2021 Slides and Audio: Allianz Technology Trust
Download the presentation and listen to the audio from our 'Ideas for your ISA' Spring Conference on 03 March...
20 Jan 2021 Kepler's top-rated investment trusts for 2021
We update our annual quantitative ratings for investment trusts…
16 Dec 2020 Fund Analysis
ATT offers a unique portfolio of technology stocks, performing strongly during COVID-19…
19 Nov 2020 Hope springs eternal
The US election has given long-suffering value investors new hope of a 'great rotation' in their favour, but that light at the end of the tunnel could in fact be a train…
26 Aug 2020 Trump v. Biden
Two of our analysts debate who will win the US election and what that means for markets…
15 Jul 2020 Why stagflation is likely and how to protect your portfolio from it
Our analysis suggests a combination of cost-push inflation and economic hardship could lead to a short, but unpleasant, period of stagflation...
09 Jul 2020 The next big thing: two mega-trends that everyone should own
Tech has beaten almost everything hands down – but nothing lasts forever. Where else should investors be looking for secular growth themes?
16 Jun 2020 Factor performance and the COVID-19 effect
Will value continue to move into the black, or fade to red?
20 May 2020 Riding for a fall?
We consider the risks which could derail the multi-year tech boom…
13 May 2020 Braving the new world
Join 15 of the UK's best known fund managers at the Kepler Trust Intelligence Virtual Summit to find out how they see the world after the pandemic...
13 May 2020 Sea change
While global giants like Amazon still hold the weather gauge, we examine the long term prospects for a shift in the prevailing wind...
15 Apr 2020 Fund Analysis
Active specialist manager, performed strongly in the COVID-19 downturn...
02 Oct 2019 Fund Analysis
The Allianz Technology Trust invests in a portfolio of technology companies, with a bias towards mid-cap companies with significant earnings growth potential...
10 Apr 2019 Because they're worth it
With the rise of the passives putting more pressure on fees than ever before, we argue that performance fees could be the key to encouraging truly active investment trust managers...
29 Mar 2019 Fund Analysis
A very actively managed specialist trust, with one of the most experienced technology investment teams in the world at the helm...
31 Oct 2018 Fund Analysis
Allianz Technology Trust is a very actively managed specialist investment trust, managed by one of the most experienced technology investment teams in the world...
31 Oct 2018 The Trump effect
Two years after the shock election of Donald Trump, we take a look at what the Trump administration has really meant for US markets and the trusts that invest in them...
26 Apr 2018 Fund Analysis
Allianz Technology Trust (ATT) offers exposure to companies involved in 'innovative disruption' in sectors as wide ranging as automobiles, advertising, security, retail and web services
26 Apr 2018 The $23.9 trillion dollar question*
Are US equities, which have hit record highs on 71 occasions in the last 12 months, overpriced or are they actually trading at a price worth paying?
27 Sep 2017 Winners and losers from tomorrow’s world
Searching for the Tesla of tomorrow…
27 Sep 2017 Fund Analysis
A pure exposure to disruptive technology...
21 Feb 2017 Don't wanna be an American idiot
We highlight various routes to US exposure for those who are not sure how much faith they place in the 'Trump Bump'...
16 Feb 2017 Fund Analysis
16 Nov 2016 Fortune favours the brave
Our analysis shows that technology trusts are far less risky than the returns they have generated suggest...
View all

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