Allianz Technology Trust: a more tech-focused alternative to Scottish Mortgage Investment Trust
Not that SMT is exclusively a technology trust but it’s the shrewd investments made in companies such as Tesla, Facebook and Amazon that have burnished its reputation – or if you prefer, the reputation of its investment manager, Baillie Gifford.
According to the data information provider Morningstar, Allianz Technology Trust has achieved the best returns over the last decade among investment trusts specialising in tech, with a 10 year annualised percentage gain of 22.36%, although its year-to-date (negative) return of -13.13% might give pause for thought.
Go back five years and as the chart below shows, there is little to choose between the share price performance of Allianz and Scottish Mortgage; it’s only in the last year that Scottish Mortgage has caught up.
Chart from the London Stock Exchange site
So, in what sort of companies has Allianz invested?
Its top five holdings, as of May 6, were: Google owner Alaphabet Inc (6.01% of the portfolio); Amazon.com (4.29%), the online retail and data servers giant; Micron Technology (3.76%), the memory chip firm; Microsoft (3.63%), the company behind the Windows operating system and the Office productivity suite; and Facebook (3.38%), the social media leviathan.
All are based in North America and indeed companies from North America account for around 86.6% of its portfolio. Geographically speaking, next comes the Far East and Pacific region (6.12%), followed by Europe excluding the UK (4.24%).
The UK, not exactly known for its global technology giants, accounts for 1.46% of the portfolio. Allianz’s investment managers, it seems, would rather hold cash (1.58% of the portfolio) rather than invest in UK technology companies.
With the possible exception of Micron, all of Allianz Technology’s top five holdings are all household names. The names get a bit more intriguing in the six-to-10 slots, with Crowdstrike Holdings (2.96%) and Okta (2.38%) weighing in at positions eight and 10.
Both Crowdstrike and Okta operate in the cybersecurity sector, which figures to be a fast-growing part of the technology sector.
Crowdstrike operates a platform that stops security breaches, data theft, and cyber-attacks while Okta is an online identity verification platform.
The London stock exchange definitely has companies doing this sort of stuff – off the top of my head I can think of Kape Technologies PLC (LON:KAPE) and Corero Network Security PLC (LON:CNS) in the former category and Intercede Group PLC (LON:IGP) in the latter – but if you want a lazy way to gain access to two US players, Allianz offers a way.
According to Morningstar, the trust’s estimated net asset value (NAV) per share is 274.23p, versus a current share price of 258p, so it is trading at discount to NAV, which is not unusual for investment trusts.
Meanwhile, the latest Qontigo US Equity Risk Monitor reckons tech stocks led the US market decline last week and fund managers are dusting off their old textbooks and relearning the tenets of value investing.
“Information technology stocks have been losing ground since late April and Info Tech is the only sector in the STOXX USA 900 index to report a year-to-date loss,” it noted.
Whether this represents a long-awaited opportunity to buy tech on the dip or a sea change in investment habits is the proverbial US$64,000 question.