Wednesday, 9 March 2022

Allianz Technology Trust - Full Year Results

This trust was established in 1995 to give investors a chance to gain exposure to the technology sector. Although the trust is UK-listed, since 2007 it has been managed by a team based in San Francisco and close to Silicon Valley which is home to many of the world's biggest tech companies. The trust was added to my portfolio in September 2020 at the price of £2.25 (post 10:1 share split) when I decided to increase my technology weighting.

The strategy is to identify a number of themes such as cloud computing, security, e-commerce and electric vehicles for example and hold some of the best companies within these sectors over the longer term.

Results

The trust has this week published results for the full year to Dec 2021 (link via Investegate).

It's been another positive year with net assets advancing by 19.5% (2020 76%) but underperforming the benchmark Dow Jones World Technology Index of 28.2%. The trust was underweight in some of the very large cap holdings which out-performed the wider tech sector with the likes of Microsoft rising 54% and Google 67%. The Covid pandemic has been a severe challenge for all sections of society around the world these past couple of years however the technology sector has played a key role providing solutions for businesses, governments and individuals.

Some current top ten portfolio holdings include Microsoft (6.2%), Apple (6.3%), Tesla (5.0%), Micron Tech (4.5%), Google (4.5%) and Taiwan Semiconductor (3.2%).

The trust has a good performance record with returns of 19% in the past year, 76% previous year, 29% in 2019, 11% in 2018 and 38% in 2017. It is one of the top performing investment trust over both the past 5 years and also 10 years.

Commenting on the past year's results, investment manager Walter Price said:

“The invasion of Ukraine by Russia has brought geopolitics to the fore after an extended period where the pandemic was front-of-mind. Our thoughts are with all those people affected by the humanitarian impact of this war. As we write, the Ukraine crisis and the related sanctions against the Russian Federation are constantly evolving. The world is certainly more volatile.  The fact that Cyber warfare was used by the Russians demonstrates that they will try to cripple any adversary with tactics to disrupt their governments, and it is possible that there may be countermeasures launched against institutions in response to the Western sanctions imposed on Russia.  This is why cybersecurity is such an essential area of spending for any company and government in our digital world and has to be at the top of company spending priorities”.

“As active investors, we are naturally looking beyond the immediate exposures and operational considerations to some of the longer-term implications and possibilities. In our view, demand for innovative technology solutions remains robust and is actually accelerating in several areas that comprise the digital transformation. While military conflicts have huge humanitarian impact and associated fears cause market volatility, we do not believe this will disrupt long-term growth drivers for various themes across the technology sector. Despite the near-term market volatility, we maintain high conviction that technology can be an attractive investment opportunity for many years ahead”.

Later this year, Mike Seidenberg will take over from Walter Price as lead manager.

Post year-end results, the past few weeks have seen a significant correction for the technology sector. One of my former holdings, Tesla was down over 30% in a matter of weeks.

ATT share price - past 3 years

Over the past year or two I have been adjusting my portfolio and now prefer just three sectors ... 55% is allocated to green/climate, 10% to technology and the remainder to defensive government bonds/gold. Holding individual tech shares can be lucrative but is also higher risk as well as more volatile. 

Obviously gaining exposure to a diversified basket of shares via a specialist fund or investment trust is probably the better option for the diy investor.

It helps that I no longer require income from my investments as this trust is all about growth and does not pay a dividend. However, as I have pointed out in the past, it is possible to take 'income' from capital appreciation. For example, selling down shares to provide 4% 'income' from a trust which is growing at an average of over 20% each year should not be too difficult.

The shares dipped as low as £1.30 at the start of Covid in March 2020 and then climbed above £3.20 in February 2021 before the technology correction. The price is currently £2.54 so just a 13% uplift on my purchase price but happy to continue holding for the longer term. I also hold Google and Microsoft as stand alone investments in my portfolio.

As ever, this article is merely a record of my personal investment decisions and should not be regarded as an endorsement or recommendation - always DYOR!

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