Performance, Commentary & Portfolio

Fund Manager’s Review

Allianz Technology Trust’s Net Asset Value (NAV) total return was 10.20% in May, compared to the Dow Jones World Technology Index return of 9.42% both in GBP.

May brought some welcome respite for technology stocks as investor sentiment was bolstered by de-escalating fears of a global trade war and a slew of positive corporate earnings releases, overshadowing market jitters over the passage of President Donald Trump’s ‘big, beautiful’ bill of sweeping tax cuts and the launch of a new trade offensive against the European Union. Semiconductors and software were the best performers within the asset class, each posting double-digit advances, while technology hardware was the lone industry laggard.

Monthly performance outpaced the benchmark on a relative basis thanks to a combination of stock selection and industry tailwinds. A below-benchmark allocation to technology hardware aided results as did bottom-up selections in IT services. This was offset by more conservative stock selection in software and our modest overweight allocation to the entertainment industry

Contributors

A below-benchmark allocation to iPhone and personal computer maker Apple Inc., contributed to relative results as shares declined amid uncertainty related to macroeconomic policies and their specific impact on the company, as well as a delay in their Artificial Intelligence (AI) progress. We incrementally trimmed our exposure to the stock in favor of companies with better near-term alpha catalysts.

Our active exposure to global cloud services provider Cloudflare, Inc. aided results as shares rallied following favorable earnings and an upbeat commentary from management, as the company’s sales-force reorganization continues to yield solid sales results and growth in new enterprise customers. We continue to hold the stock given its secular growth potential combined with a high level of visibility.

Shares of financial services platform Robinhood Markets, Inc. advanced following upside revenue and earnings results, which led to higher sellside price targets. The company was a new buy during the month thanks to its leadership position and beneficiary of a high level of customer loyalty and engagement, particularly from younger demographic clients.

Our positions in database architecture provider Snowflake, Inc. and semiconductor and cyber security solutions leader Broadcom Inc. also contributed to absolute results in May.

Detractors

Our structural below-benchmark allocation, given our max position size limitations, to graphics processing and related networking leader NVIDIA Corp. offset results as the stock rallied following favorable earnings results and an upbeat guidance. The stock was our second largest holding in the portfolio at the end of the month thanks to the company’s leadership position combined with bullish sell-side and investor expectations.

Shares of Okta, Inc., a leading independent identity management platform, were lower following earnings results with management posting what was deemed a conservative guidance, led by an overall moderation in sales expectations and a limited contribution from new products. We continue to hold the stock given its longer-term growth potential and valuation which is increasingly attractive in light of the share pullback.

Atlassian Corp., a designer and developer of enterprise software platform for project management, collaboration, issue tracking, integration, deployment and support services was lower following a weaker-than-anticipated outlook. We believe this moderation is temporary and reflective of the company’s shift to a subscription, cloud-based business model.

Our below-benchmark position in enterprise software, cloud storage and cyber security leader Microsoft Corp. and active exposure to Chinese infrastructure and online marketplace provider Alibaba Group Holding Ltd. also detracted from relative results during the month.

New buys and sells 

Turnover in May was undertaken at a regular pace to incrementally improve the risk versus reward profile of the Portfolio. We newly purchased shares of the aforementioned Robinhood Markets, Inc. given its secular growth potential and strong underlying client base, which is likely to drive revenue and earnings in the future. We also added shares of chipmaker Advanced Micro Devices in an effort to increase the semiconductor and AI-related exposure in the fund. These new buys were funded in part via exists to financial services providers Fiserv Inc. and PayPal Holdings due to concerns of moderating growth from higher consumer pressures and increased competition in the space. We also newly purchased shares of mobile advertising, marketing and analytics provider AppLovin Corp. following a recent pullback in the company’s share price, as well as the outsized growth of their AI-driven platform and strategic shift toward advertising technology which is likely to drive long-term growth.

Market Outlook 

We believe the current risk and reward profile for the technology sector remains attractive amid favorable underlying fundamental factors and anticipation of limited impact due to trade and tariff policies. Quarterly earning have been broadly encouraging and valuations do not appear to be at stretched levels. 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
31 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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