Allianz Technology Trust PLC is a technology-focused investment trust managed by an experienced portfolio management team. The trust has a high conviction concentrated portfolio and has been recognized as the Investment Week Investment Company of the Year (Specialist) from 2017 to 2021.
In August 2023, the trust's net asset value (NAV) total return was 1.85%, outperforming the Dow Jones World Technology Index return of 0.60%. However, stock selection and industry allocation slightly detracted from relative returns.
Nvidia Corp. was the top contributor to relative performance during the month. The company delivered strong guidance, exceeding investor estimates, driven by tremendous growth in AI products and a faster-than-expected supply chain ramp-up. The trust trimmed its position in Nvidia due to the recent strong run and rise in valuation but maintains conviction in the company.
Amazon.com, Inc. was also a top contributor, reporting strong earnings results and margin improvement in its North America segment. The company sees further margin opportunities through fulfillment localization strategy and expects additional growth from generative AI-enabled products.
Other top contributors included an underweight position in Apple Inc., not owning Tencent Holdings Ltd., and an overweight position in Arista Networks Inc.
On the other hand, Datadog Inc. was a top detractor in August due to mixed second-quarter results and cloud optimization headwinds. Despite the challenges, the trust remains positive on the long-term opportunity for Datadog driven by data growth, the shift to the cloud, and increasing infrastructure complexity.
Fortinet, Inc., a cybersecurity software provider, also detracted from performance due to disappointing results and weakness with large enterprise and service provider customers. The trust believes the long-term opportunity for Fortinet as a portfolio holding is still intact.
Other top detractors included overweight positions in Meta Platforms Inc., MongoDB, Inc., and Hubspot, Inc.
Looking ahead, the trust expects the technology sector to continue benefiting from secular tailwinds, driving capital appreciation over time. The scrutiny on IT budgets and potential macroeconomic challenges are acknowledged, but the trust anticipates accelerating demand for innovative and productive solutions such as cloud, software-as-a-service, artificial intelligence, and cybersecurity. The trust is also excited about the advancement of artificial intelligence and its potential impact on companies.
Overall, the trust's portfolio managers remain optimistic about the long-term growth and profitability characteristics of technology companies but caution investors to expect volatility in this emerging sector.