Performance, Commentary & Portfolio

Fund Manager’s Review

Allianz Technology Trust’s Net Asset Value (NAV) total return was -0.61% in April, compared to the Dow Jones World Technology Index return of -1.80%, both in GBP.

Stocks initially plummeted in April amid fears that the global response to President Donald Trump’s “Liberation Day” tariff offensive would send the global economy into recession, but recovered most of their earlier losses when the president announced an abrupt U-turn to provide scope for trade negotiations as easing tariff tensions and optimism around first-quarter corporate earnings releases brought some welcome respite near month end. Technology shares modestly outperformed the broader market, led by gains in entertainment and software industries, while technology hardware was a laggard.

Monthly performance outpaced the benchmark on a relative basis thanks to a combination of stock selection and industry tailwinds. Active allocations and stock picking in software and entertainment industries led relative gains, while exposure to broadline retail (subsector comprising of companies that offer a wide range of consumer discretionary merchandise to end consumers) and short-term stock picking in interactive media and services offset results only modestly.

Contributors

Shares of cyber security endpoint and response detection leader CrowdStrike Holdings, Inc. advanced thanks to a turnaround in investor sentiment combined with bullish execution and earnings expectations. The stock remains a key holding in the portfolio thanks to its strong leadership position, comprehensive cyber security offering, increasingly led by Artificial Intelligence (AI)-powered solutions and history of innovation

Our off-benchmark exposure to Netflix, Inc., a subscription entertainment and production company, contributed to performance following above- consensus earnings results, led by a widening profit margin. We continue to hold the stock given its durable demand and dominant market position, which is likely to perform well regardless of the macroeconomic climate.

A below-benchmark allocation to iPhone and personal computer maker Apple Inc., contributed to relative results as the stock was lower amid weakness in the company’s services segment combined with an underwhelming guidance. We continue to own the stock given its leadership position and history of innovation and will remain at a structural relative underweight due to its significant weight in the benchmark.

Our active positions in big data analytics and security solutions provider Palantir Technologies Inc. and electrical components maker Amphenol Corp. also contributed to performance due to their double-digit monthly returns.

Detractors

A below-benchmark allocation to enterprise software, cloud storage and cyber security leader Microsoft Corp. offset relative performance for the month as the stock rallied thanks to favorable earnings results, led by Azure growth acceleration and an increasing AI contribution. We added to our position during the month, given the stock’s attractive alpha potential, diversified business model and lower risk profile, although will remain at a structural underweight given its sizable index weight.

An above-benchmark weight in Micron Technology, Inc. a designer and manufacturer of memory and storage solutions, detracted from results as shares were lower due to concerns of a moderation in infrastructure spending and geopolitical tensions. We continue to hold the stock given its longer-term potential, led in part by growing demand for memory solutions in AI applications.

Our active position in Chinese multinational conglomerate Alibaba Group Holding Ltd. offset performance as shares were impacted over U.S.-China trade tensions and a potential for delisting of the company’s shares from U.S. markets. We continue to hold the stock given its portfolio diversification, long-term growth potential and broad-based exposure to e-commerce, cloud computing, digital media and AI.

Our positions in financial technology solutions provider Fiserv, Inc. and chip maker Taiwan Semiconductor Manufacturing Co. Ltd., also detracted from relative performance during the month.

New buys and sells 

Turnover in April was undertaken at a regular pace to incrementally improve the risk-versus reward profile of the Portfolio. We newly purchased shares of German business and enterprise software maker SAP SE thanks to the company’s relatively defensive profile, diversified international exposure and product cycle evolution. We made the decision to sell semiconductor companies Applied Materials Inc. and Marvell Technology Inc., amid expectations of rising competition and a moderation in near-term conviction due in part to a less certain macroeconomic outlook. We fully exited Celestica Inc., a maker of electronic components, due in part to concerns that the company was losing AI market share to other companies. Lastly, our position in the social networking platform Reddit Inc. was sold in an effort to reduce the overall risk to the portfolio given the company’s valuation level and higher beta exposure.

Market Outlook 

We believe the current risk and reward profile for the technology sector is incrementally more compelling as valuation levels have become more attractive and we are seeing no concerns that overall sector growth will be meaningfully impacted due to macroeconomic uncertainty. We expect recent volatility, due primarily to trade and tariff concerns, to alleviate and stocks to be increasingly driven bytheir bottom-up attributes. Although near-term uncertainty may preside, we maintain a positive mid-to- long-term outlook for equity markets and we continue to believe market leaders who execute well are likely to be rewarded regardless of the macroeconomic backdrop. Our expectation is that merger and acquisition activity may improve and companies which have ample cash may look to purchase new assets at a discount. Amid any sell-offs, we are opportunistically looking to upgrade select names and add to our highest conviction ideas to better position the portfolio for improved performance.

Our focus remains on building the portfolio from a bottom-up perspective with a macro-overview. Technology remains a key enabler across almost every vertical industry and we will continue to seek stocks which solve difficult problems and can be long-term outperformers. Despite short- term periods of higher volatility, earnings growth ultimately drives stock prices over the long term and in our view, we are still early in the spending trend supporting this dynamic segment.

Mike Seidenberg
16 May 2025

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.

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