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.
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Fund Manager's Review
Allianz Technology Trust returned -0.5% in October, outperforming the Dow Jones World Technology Index return of -1.6%. During the month, stock selection contributed and industry allocation detracted from relative performance. For the year to date period, the Trust returned 51.6% GBP, significantly outperforming the benchmark return of 29.6% GBP.
Paycom Software was the top contributor to relative performance during the period as analysts upgraded the stock due to rebounding employment trends. Paycom provides cloud-based payroll and human capital management software in a software-as-a-service (SaaS) format to small and medium businesses in the US. The company’s software provides unique value to customers because it typically replaces multiple systems and helps manage complex compliance requirements. The single database, ease of implementation, and high customer satisfaction should help Paycom continue to take market share in this market. We see the company as a unique cloud asset modernising the payroll market which, we believe, may give it the opportunity to continue experiencing doubledigit revenue growth while aiming to maintain a best-in-class earnings before interest, taxes, depreciation, and amortization (EBITDA) margin.
Pinterest was also a top relative contributor after reporting third quarter financial results that exceeded elevated expectations and was driven by monthly active user growth of 37% year-on-year and revenue growth of 58% year-on-year. Management provided fourth quarter revenue guidance far above expectations as the company expects to benefit from a rebound in advertising and the ongoing secular shift towards e-commerce. Pinterest is a social network that allows users to visually share and discover new interests by posting images or videos. The company has made considerable investment in artificial intelligence to better personalise its site, make content more searchable, improve its understanding of intent, and enhance the commerce experience. We believe the company is well positioned to benefit from the secular shift from traditional advertising towards digital advertising and e-commerce over the next several years. Other top active contributors included an underweight position in Apple, not owning SAP, and an overweight position in Flex.
Our underweight position in Alphabet (Google’s parent), one of the largest holdings in the benchmark, was the top relative detractor during the period. The company reported quarterly financial results that beat expectations driven by broad-based growth in advertiser spending. Management remains confident in its ability to drive growth, as it continues to deepen investments in key segments such as Google Cloud. Our position in security software vendor, CrowdStrike, was also a top relative detractor during the period. The company is emerging as a leader in the next-generation endpoint security market and has ambitions to expand into a broader cloud security platform vendor. Shares underperformed with the broadly risk-off market sentiment and aversion toward strong year-to-date performers. During the period, the company hosted a constructive product event announcing several new modules and partnerships. We continue to believe CrowdStrike’s best-in-class endpoint security solutions are particularly relevant in the new distributed workforce context that many enterprises find themselves in today.
Other top active detractors included an underweight position in Tencent and overweight positions in Tesla and Bloom Energy.
In our view, the technology sector continues to benefit from strong tailwinds which should continue to drive attractive long-term appreciation. There is no question in our minds that the present events around the COVID-19 crisis will spur the use of technology and change how we live and work in the future. As companies adjust budgets due to supply and/ or demand disruptions, the need for companies to reduce costs should accelerate the move to cheaper and more productive solutions such as cloud, software-as-a-service, artificial intelligence, cyber security, etc. We are in a period of rapid change, where the importance of technology is key to the prosperity of most industries. This environment is likely to provide attractive growth opportunities in many technology stocks over the next several years.
We continue to believe the technology sector can provide some of the best absolute and relative return opportunities in the equity markets – especially for bottom-up stock pickers.
11 November 2020
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 31.01.20 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.