Welcome to the latest update from the Trust's portfolio managers

February 2023

• The strategy is managed by a deeply experienced portfolio management team who have over 70 years of collective experience managing technology strategies**
• High conviction concentrated portfolio
• Winner of the Investment Week Investment Company of the Year Award (Specialist) for five of the past six years from 2017 to 2021.*

Monthly Fact Sheet

Welcome to our latest monthly fact sheet, featuring data and commentary as at 28.02.2023

Portfolio Overview

Allianz Technology Trust’s NAV total return was 1.10% in February, compared to the Dow Jones World Technology Index return of 0.81%. During the month, stock selection contributed to relative performance, while industry allocation modestly detracted.

Contributors

Palo Alto Networks delivered better-than-expected top and bottom-line metrics, strong full-year guidance and further evidence the company’s innovation flywheel is healthier than ever. Both revenue and total billings grew 26% during the quarter and were ahead of Wall Street expectations. The company’s operating margins were up 4.4% compared to the prior year to 22.8% which led to Earnings per Share (EPS) growth of 81%. ‘Adjusted non-GAAP Free Cash Flow’, a key metric of total company health, grew 76% on a trailing twelve-month (TTM) basis. Steady research and development (R&D) investments coupled with the benefits from successful Merger and Acquisition (M&A), drove $2.3 billion in Next Generation Security (NGS) Annualized Recurring Revenue (ARR), which was up 63% compared to the prior year. The NGS business is the primary growth engine of the business which makes size and growth all the more impressive.

Meta Platforms Inc. delivered solid earnings results, driven by strong engagement as well as improvements in e-commerce ad spend. Meta lowered its full year 2023 total operating expenses and capital expenditures outlook, which have been a key focus of investor angst. The company noted that it will focus on driving efficiencies in some areas, while contemplating revenue growth in others. This is evident in the company’s revised data center plans, where Meta is focused on cost-efficiency and flexibility. This is a very welcomed change as Meta’s high level of spending has been a concern for several years. Additionally, Reels plays doubled year-over-year, and Meta expects Reels usage to be a “neutral” monetisation challenge at the end of 2023 or early 2024. Reels has been a significant revenue challenge, so this improvement could contribute to more stable revenue growth over time.

Other top contributors included overweight positions to Hubspot, Inc. and Tesla, Inc., and an underweight position to Alphabet.

Detractors

Our underweight to NVIDIA Corp. was among the top detractors in February. Earnings results were ahead of consensus expectations, and management guided ahead of the Wall Street consensus viewpoint for the April quarter. The company appears to be through the bottoming process in its gaming segment, as well as seeing stabilisation for its data center business. The data center business is expected to produce solid growth in the April quarter and then accelerate further as the year goes on. Management highlighted several ways in which it is looking to monetise generative model training and inference in both hardware and software, which should become a key contributor to overall growth. We will look for attractive opportunities to add to the position to reduce the underweight relative to the benchmark.

Paycom reported modest revenue upside, while EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortisation) reached around $164 million, about $19 million ahead of consensus forecasts. Management highlighted the company continues to benefit from strong operational execution and healthy end-market demand that is expected to continue throughout 2023. Paycom exited the year with 36 thousand clients (+8%), while the number of employee records grew 14%, indicative of the company moving upmarket to larger-sized employers. The company’s customer retention rate of 93% was consistent with its four-year average, providing revenue stability with its core. We believe the company continues to execute well.

Other top detractors included overweight positions to JD.com, Inc. and Taiwan Semiconductor Manufacturing Co., Ltd., and an underweight to Apple Inc.

Market Outlook

Our expectation is that the recent decline in technology stocks could translate to an attractive opportunity for long-term investors as the technology sector is likely to continue benefiting from secular tailwinds which should, we believe, drive capital appreciation over time. Having said this, we are cognisant of the scrutiny on IT budgets and the potential challenge near term. In addition, many companies remain challenged to find workers to meet customer demands and are likely to further leverage technology-based solutions to improve productivity of limited staffs. As companies need to reduce costs and improve productivity, particularly in light of a potentially uncertain macroeconomic outlook, we expect to see accelerating demand for innovative and more productive solutions such as cloud, software-as-a-service, artificial intelligence, cyber security, etc. We are in a period of rapid change, where the importance of technology is key to the prosperity of most industries. We believe that this environment is likely to provide attractive growth opportunities in many technology stocks over the next several years.

We continue to believe the technology sector can provide some of the best absolute and relative return opportunities in the equity markets — particularly for bottom-up stock pickers with proven long-term selection capabilities.

For the latest portfolio breakdown, performance and investment insights from Silicon Valley, please visit www.allianztechnologytrust.com.

*Past performance does not predict future returns.

**From 25 July 2022, discretionary portfolio management services formerly provided to Allianz Technology Trust PLC (the “Company”) by Allianz Global Investors (“AllianzGI”) have been delegated to Voya Investment Management Co. LLC (“Voya IM”). All members of the former AllianzGI Global Technology Team transferred to Voya IM and continue to manage the Company’s portfolio. It is anticipated that there will be no change to the investment process. AllianzGI will remain the Company’s AIFM (Alternative Investment Fund Manager), providing company secretarial, administration and sales and marketing services.

 Active is:

With regards,

Allianz Global Investors GmbH

199 Bishopsgate, London, EC2M 3TY
Freephone (UK calls only): 0800 389 4696
Email: [email protected]

www.allianztechnologytrust.com

Investing involves risk. The value of an investment and the income from it could fall as well as rise and investors might not get back the full amount invested.

The Management Company may decide to terminate the arrangements made for the marketing of its collective investment undertakings in accordance with applicable de-notification regulation. This is a marketing communication issued by Allianz Global Investors GmbH, an investment company with limited liability, incorporated in Germany, with its registered office at Bockenheimer Landstrasse 42-44, D 60323 Frankfurt/M, registered with the local court Frankfurt/M under HRB 9340, authorised by Bundesanstalt für Finanzdienstleistungsaufsicht (www.bafin.de). Further information on Investor Rights are available at www.regulatory.allianzgi.com. Allianz Global Investors GmbH has established a branch in the United Kingdom, Allianz Global Investors GmbH, UK branch, 199 Bishopsgate, London, EC2M 3TY, www.allianzglobalinvestors.co.uk, deemed authorised and regulated by the Financial Conduct Authority. Details of the Temporary Permissions Regime, which allows EEA-based firms to operate in the UK for a limited period while seeking full authorisation, are available on the Financial Conduct Authority's website (www.fca.org.uk). Details about the extent of our regulation by the Financial Conduct Authority are available from us on request.

This email, its contents and any files transmitted with it are intended solely for the addressee(s) and may be legally privileged and/or confidential. If you have received this email in error please delete it and contact the sender via the switchboard on +44 (0)20 7859 9000 or via return e-mail. You should not copy or forward it on or otherwise use the contents, attachments or information in any way. Any such unauthorised use or disclosure may be unlawful. Allianz Global Investors GmbH give no warranty as to the security, accuracy or completeness of this email and accept no responsibility for changes made to this email, after it was sent. Any liability for viruses is excluded to the fullest extent permitted by law. Any opinion expressed in this email may be personal to the sender and may not necessarily reflect the opinion of Allianz Global Investor GmbH. We reserve the right to monitor all e-mail communications through our networks.

If you wish to unsubscribe from this mailing list, please visit our Preference Centre.