Fund Research

Allianz Technology Trust

29 March 2019 View latest version

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.

As at:

22/03/2019

Group/Investment

Allianz Technology Trust

Ticker

ATT

Management Company

Allianz Global Investors

Manager Name

Walter C. Price;Huachen Chen;Danny Su;Michael A. Seidenberg;

Association of Investment Companies (AIC) Sector

Sector Specialist: Tech Media & Telecomm

12 Mo Yield

0.0%

Dividend Distribution Frequency

None


Latest Market Capitalisation

£506,713,237

Latest Net Gearing (Cum Fair)

-1%

Latest Ongoing Charge Ex Perf Fee %

1.05

Shares Outstanding

33,557,168

(Discount)/ Premium % (Cum Fair)

0.3

Daily Closing Price

1510p


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.

William Heathcoat Amory

Disclaimer

This report has been issued by Kepler Partners LLP.  The analyst who has prepared this report is aware that Kepler Partners LLP has a relationship with the company covered in this report and/or a conflict of interest which may impair the objectivity of the research.

Past performance is not a reliable indicator of future results. The value of investments can fall as well as rise and you may get back less than you invested when you decide to sell your investments. It is strongly recommended that if you are a private investor independent financial advice should be taken before making any investment or financial decision.

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Fund History: Allianz Technology Trust

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