Allianz Technology Trust PLC - June Fact Sheet

Allianz Technology Trust PLC

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

June 2023

Why invest in Allianz Technology Trust?

• The strategy is managed by a deeply experienced portfolio management team who have over 100 years of collective experience managing technology strategies**
• High conviction concentrated portfolio
• Winner of the Investment Week Investment Company of the Year Award (Specialist) from 2017 to 2021.*

Monthly Fact Sheet

Welcome to our latest monthly fact sheet, featuring data and commentary as at 30.06.2023

Portfolio Overview

The Allianz Technology Trusts NAV total return was 2.28% in June, compared to the Dow Jones World Technology Index return of 2.63%. During the month, stock selection contributed, and industry allocation detracted from relative returns.

Contributors

Palo Alto Networks, Inc. was a top contributor in the month of June. The company is seeing considerable strength with expansions within its installed base as more enterprises move to the cloud with the companys platform. Some large deal activity in the federal segment could be a growth driver the next few quarters for the company as Palo Alto appears to be well-positioned to benefit from the cloud transformation across multiple federal departments. In our view, overall cloud activity continues to be a key area of strength that is enabling the company to win more complex enterprise deals which are getting approved despite a murky macro-economic environment. The management team has been executing its growth strategy very well, and we maintain conviction in the company as a portfolio holding.

Nvidia Corp. delivered a strong quarter in May, and the stock continued to perform well in June. Demand is primarily driven by accelerated spending on generative Artificial Intelligence (AI) by cloud service providers, consumer internet companies and enterprises. Growth in gaming and pro visualisation continues as the company confirmed the end of inventory digestion and a ramp-up in its new RTX 40 Series (Graphics Processing Units). Channel checks are indicating ongoing strong demand as enterprises and consumers across the globe explore use cases of AI. and its our belief cybersecurity will benefit accordingly as the technology is embraced.

Other top relative contributors included overweight positions in MongoDB, Inc., Tesla, Inc. and Shopify, Inc.

Detractors

Okta, Inc. delivered solid results for its fiscal first quarter, beating expectations for revenue. The company also generated record free cash flow as the company tightly controlled costs. However, the company continues to see macro challenges increase in SMB (Small and Midsize Business) and enterprise, leading to shorter duration contracts, slower seat expansion and fewer new customer additions. Macro impacts were felt across multiple product lines. The results in the quarter were primarily driven by cross-selling efforts, as customers looked to rationalise the number of vendors they are dealing with, and Okta offers a broad range of solutions in the space. The weakness in new customer growth is weighing on investor sentiment and led to the decline in the month. While the company is taking steps to improve execution, we believe it will take time to sustainably resolve these issues. Additionally, competitive threats are rising, particularly from Microsoft Corp. as they are increasing their focus on security products and services. Due to these challenges, we exited our position in Okta during the period.

CrowdStrike Holdings, Inc. reported decent quarterly results, exceeding consensus expectations for net new annual recurring revenue, total revenue, and also raising full-year guidance. However, macro pressures led to elongated sales cycles and additional deal scrutiny with the environment worsening sequentially. The stock fell during the period, reflecting higher expectations entering the quarter. Despite the near-term decline in the stock price, we believe the results were still strong and our longer-term expectations remain intact. CrowdStrike indicated that it is seeing customers consolidate more onto its platform, which creates larger and more complex deals.

Other top detractors included an underweight in Apple Inc. and overweights to Advanced Micro Devices, Inc. and MercadoLibre, Inc.

Market Outlook

Our expectation is that the recent macro-economic challenges could translate to an attractive opportunity for long-term investors as the technology sector is likely to continue benefitting from secular tailwinds which should drive capital appreciation over time. Having said this, we are cognisant of the scrutiny on IT budgets and the potential challenge in the 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. Lastly, we are excited about the advancement of artificial intelligence and what it means to the companies who trial and embrace these new models. Like many secular themes in technology, we would expect the companies who both enable and benefit to have good long term revenue growth and profitability characteristics but caution investors to expect volatility in this emerging sector. This is yet another example of technology solving a difficult problem and providing companies with a competitive advantage over time. 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 Companys portfolio. It is anticipated that there will be no change to the investment process. AllianzGI will remain the Companys AIFM (Alternative Investment Fund Manager), providing company secretarial, administration and sales and marketing services.

Active is:

With regards,

Allianz Global Investors UK Limited

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

www.allianztechnologytrust.com

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