Positive stock selection delivers outperformance for Allianz Technology - Allianz Technology Trust (ATT) announced that for the year to 30 November 2017, the company's Net Asset Value (NAV) per share increased by 41.0%. The benchmark index, the Dow Jones World Technology (sterling adjusted, total return), increased by 31.5% over the same period, creating an outperformance for the portfolio of 9.5% in NAV terms. The share price returned 50.2% over the year.
The discount to NAV narrowed, from a 4.4% discount (at 30 November 2016) to a small premium of 1.8% by the end of the reporting period.
Stock selection drove relative returns in the semiconductor sector and in particular from holdings in Micron and Square.
Micron has seen a significant appreciation in its share price, on the back of strong earnings and a low starting price. The fund did not own Qualcomm, which underperformed due to poor results. Square provides technology for retailers to process payments and has evolved to deliver credit / debit card processing. The investment manager identified this stock early in its life cycle.
As with other companies investing in technology stocks, the biggest detractors to performance were underweight to Chinese companies such as Tencent.
Outlook from the Manager
While some investors assume technology companies may only see a small benefit from US tax reform, the manager believes this can significantly help the sector. New tax rules will allow companies to repatriate cash balances held offshore at lower tax rates. Cash repatriation can lead to larger cash returns to shareholders of large technology companies, and it could spark M&A activity in the tech sector, which should benefit smaller companies. Additionally, companies across the economy will likely spend at least some of the tax savings to invest in their businesses. the manager expects more spending to flow to technology companies that offer innovative products and services designed to help businesses increase productivity and improve efficiency. In their opinion, these factors should lead to continued strong earnings growth for technology companies.
ATT : Positive stock selection delivers outperformance for Allianz Technology