Allianz Technology Trust (LSE:ATT)
The Trust’s objective is to achieve long-term capital growth by investing principally in the equity securities of quoted technology companies on a worldwide basis.
The award-winning Allianz Technology Trust PLC offers investors access to the fast moving world of technology with the reassurance that investment decisions are made by Walter Price who has 40 years of experience of investing in technology. He is Co-Head of the AllianzGI Global Technology Team which currently manages $4bn in assets under management.
Disclaimer: A ranking, a rating or an award provides no indicator of future performance and is not constant over time.
Fund Manager's Review
The Allianz Technology Trust’s NAV returned -1.6% in October, underperforming the Dow Jones World Technology Index return of -0.9%. During the month, stock selection contributed and industry allocation detracted from relative performance.
Our position in video streaming platform provider, Roku, was the top relative contributor. Shares recovered a large portion of their value lost in the prior month as investors digested the recent competitive products announced by Comcast and Facebook. Additionally, Roku announced that the Apple TV+ streaming service would be available on its platform, which validated the company’s position as a leading aggregator. Our view is that the company continues to be uniquely positioned as an independent platform with highly advantageous direct relationships with TV manufacturers and is a direct beneficiary of the secular trend towards streaming.
Our position in electric vehicle maker, Tesla, was also among the top relative contributors during the period. Shares gained after the company reported a surprise profit and provided other positive updates in the latest quarterly report. Beyond the financial results, the CEO announced the company was ahead of schedule on key initiatives such as the opening of a Chinese factory and the release of the Model Y cross-over vehicle. We are encouraged by the strong financial results this quarter but acknowledge the high variability of cash flows given the capital intensity of the company’s strategy. This variability of cash flows makes the shares more sensitive to changes in business trajectory and the perception of capital conditions. We are mindful of this sensitivity and manage the position size in the portfolio to reflect these issues.
Other top active contributors included overweight positions in RingCentral, Advanced Micro Devices, and AVEVA.
Our position in cloud security company Zscaler was a top relative detractor during the period. Investors have been concerned aboutmanagement’s conservative guidance for growth in 2020, raising concerns of potential increased competitive risks. Customers are increasingly adopting Zscaler’s products, which provide a single platform to enforce business and security policy for their users to access multiple applications and services. Additionally, customers were seeing a quick return on their investment, which was a very strong selling point for Zscaler relative to competitors.
Our position in Proofpoint was also a top relative detractor in October. The company reported solid quarterly results that slightly exceeded consensus expectations for billings, revenue, and earnings. However, the company reiterated full-year guidance, which results in a slightly lower fourth-quarter guide. Given the strength in the underlying business and the demand environment, this is likely conservative guidance. The highlights for the quarter were strength in the company’s new security products as well as strong performance in the core products. Proofpoint’s portfolio approach to developing new products and markets should help it deliver sustainable and consistent growth in a dynamic market. The use of bundling to simplify sales processes should also help the company capture more market share and drive faster returns on newer products. Proofpoint is benefiting from several growth drivers, and the power of its software-as-a-service model is beginning to generate leverage and produce solid free cash flow growth.
Other top active detractors included an underweight position in Apple and overweight positions in Temenos and Alteryx.
Walter Price, CFA
Allianz Technology Trust PLC is managed by Walter Price who is a Managing Director and Co-Head of the AllianzGI Technology Team in San Francisco, having joined in 1974. Walter is a current Director and past president of the M.I.T. Club of Northern California. He also heads the Educational Council for M.I.T. in the Bay Area and is a past Chairman of the AIMR Committee on Corporate Reporting for the computer and electronics industries.
Investing involves risk. The value of an investment and the income from it may fall as well as rise and investors may not get back the full amount invested. The views and opinions expressed herein, which are subject to change without notice, are those of the issuer and/or its affiliated companies at the time of publication. The data used is derived from various sources, and assumed to be correct and reliable, but it has not been independently verified; its accuracy or completeness is not guaranteed and no liability is assumed for any direct or consequential losses arising from its use, unless caused by gross negligence or wilful misconduct. The conditions of any underlying offer or contract that may have been or will be made or concluded shall prevail.
All data source Allianz Global Investors as at 30.09.19 unless otherwise stated.
This is a marketing communication issued by Allianz Global Investors GmbH, an investment company with limited liability, incorporated in Germany, with its registered office at Bockenheimer Landstrasse 42‑44, D‑60323 Frankfurt/M, registered with the local court Frankfurt/M under HRB 9340, authorised by Bundesanstalt für Finanzdienstleistungsaufsicht (www.bafin.de). Allianz Global Investors GmbH has established a branch in the United Kingdom, Allianz Global Investors GmbH, UK branch, which is subject to limited regulation by the Financial Conduct Authority (www.fca.org.uk). This communication has not been prepared in accordance with legal requirements designed to ensure the impartiality of investment (strategy) recommendations and is not subject to any prohibition on dealing before publication of such recommendations.
This is no recommendation or solicitation to buy or sell any particular security. Any security mentioned above will not necessarily be comprised in the portfolio by the time this document is disclosed or at any other subsequent date.