The data shown is not constant over time and the allocation may change in the future. Totals may not sum to 100.0% due to rounding. All data source Allianz Global Investors unless otherwise stated.
Data as of 30.06.2019
| 3M | 6M | 1Y | 3Y | 5Y | |
|---|---|---|---|---|---|
| Share Price | 7.6 | 34.9 | 15.5 | 165.5 | 225.1 |
| NAV | 6.3 | 27.4 | 16.7 | 129.1 | 203.2 |
| Benchmark | 6.0 | 22.9 | 12.0 | 93.8 | 167.1 |
Source: Thomson Reuters DataStream, percentage growth, mid to mid, total return to 30.06.2019.1
| 2019 | 2018 | 2017 | 2016 | 2015 | |
|---|---|---|---|---|---|
| Share Price | 15.5 | 45.3 | 58.2 | 2.3 | 19.7 |
| NAV | 16.7 | 36.7 | 43.6 | 14.9 | 15.2 |
| Benchmark | 12.0 | 23.4 | 40.2 | 18.9 | 15.9 |
Source: Thomson Reuters DataStream, percentage growth, mid to mid, total return to 30.06.2019.1
1Past performance is not a reliable indicator of future returns. You should not make any assumptions on the future on the basis of performance information. The value of an investment and the income from it can fall as well as rise as a result of market fluctuations and you may not get back the amount originally invested.
Copyright 2019 © DataStream, a Thomson Reuters company. All rights reserved. DataStream shall not be liable for any errors or delays in the content, or for any actions taken in reliance thereon.
Fund Manager Comments
Portfolio Overview
The Trust’s NAV gained 5.5% in June, underperforming the Dow Jones World Technology Index return of 6.8%. During the month, stock selection contributed and industry allocation detracted from performance relative to the index.
Our position in Square was among the top contributors during the period. The company develops business management software for small- & medium-sized businesses (SMB) and monetises many of these products through transaction processing. Shares gained as investors looked toward the second half of the year where Square is expected to show growth in processing volume generated by the onboarding of a large events marketplace. Additionally, the company announced the integration of third-party food delivery services such as Postmates and DoorDash to the Square for Restaurants platform. We see the company as a disruptor in the SMB payments and software market with multiple vectors for growth.
Our position in Okta was also a top contributor after it reported strong quarterly results with 50% revenue growth year-on-year. Okta is a data security provider offering services such as automated user management, integration, mobile identification, multifactor authentication, and reporting software. Okta has a compelling opportunity to disrupt the large market for identity and access management. With a large number of applications and over 5,000 customers, Okta is beginning to see a network effect developing. The company also benefits from the shift to the cloud. Subscription revenue was driven by the company’s acceleration with enterprise customers. The world's largest organisations are increasingly realising that identity security is essential to their cloud, digital transformation, and security initiatives. A growing market opportunity, strong execution, and new product launches should further advance Okta’s leadership in identity security.
Other top active contributors included an underweight position in Alphabet (Google’s parent) and overweight positions in Tableau Software and Cypress Semiconductor.
Not owning Apple, one of the largest holdings in the benchmark, was the top detractor from relative performance. After falling sharply in May, shares outperformed in June due to easing US-China trade tensions and a series of dovish statements from key central banks. Some investors are optimistic that Apple’s large installed base of iPhone users will boost future iPhone upgrades as well as monetisation of services. However, we expect to see a lull in the 2019 iPhone product cycle ahead of the 5G iPhones in 2020. Further, we are seeing lower demand from Chinese consumers. We are not currently invested in the stock.
Our position in Cree was also a top detractor from relative performance. Cree develops light-emitting diode (LED) products, lighting products, and power and RF applications. Shares came under pressure after the company negatively revised financial guidance for the June quarter. Sales of materials related to the wireless infrastructure buildout were impacted by US restrictions on Huawei, and sales of LED products fell short due to global trade concerns. The company is currently increasing manufacturing capacity for its specialty semiconductors, which dramatically increase efficiency in electric vehicle (EV) drivetrains and charging stations. We believe demand for these EV components could increase significantly over the next few years.
Other top active detractors included not owning Samsung or NVIDIA and an overweight position in Zynga.
Market Outlook
Technology is well-positioned to remain a major driver of market returns. The ongoing digital transformation among corporations should continue to drive growth in IT spending. Companies across the economy are turning to technology solutions to increase revenue, improve productivity, and enhance operating efficiency. We believe this is a multi-year transition which is still in the very early stages.
The growth in technology is coming from the creation of new markets, rather than simply gross domestic product (GDP) growth. Industries such as automobiles, advertising, security, retail, and manufacturing are all being shaped and transformed by advances in technology.
Despite high valuations for some high growth companies, we continue to see the potential for massive addressable markets much larger than the revenue today. However, we have consolidated our exposure to these areas in select companies having the most compelling solutions.
We are also finding excellent investment opportunities among more attractively valued areas of technology. In particular, certain technology incumbents are making compelling progress on their “as-a-service” offerings.
Artificial intelligence (AI) remains a significant trend. We expect AI will increasingly be used to make our lives more convenient.
We will continue carefully balancing risks and opportunities, leveraging our industry expertise, and emphasising individual stock selection.
Companies across the economy are turning to technology solutions to increase revenue, improve productivity, and enhance operating efficiency
This is no recommendation or solicitation to buy or sell any particular security.