Allianz Tech confirms star manager exit as it reports brutal first half

Higher inflation and interest hurt the trust in the first half of 2022, plus manager Walter Price announces retirement. 

Allianz Technology Trust underperformed its benchmark in the first half of the year (to 30 June 2022), delivering a net asset value (NAV) loss of 30.6% compared with a 22.7% loss for the Dow Jones World Technology Index.

However, the trust’s discount widened to 13.9% over the reporting period, leaving shareholders nursing a -41% return.

Chair Robert Jeens, writing in the trust’s half-year results, said it had been a tough period for growth investors and tougher still for those seeking returns from innovative technology companies.

“The combination of unexpectedly high inflation, rising interest rates and Putin's war against Ukraine has caused a broad exodus from growth assets as investors worry about the possibilities of recession and stagflation,” he explained.

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Jeens also confirmed that Walter Price, who has been managing the trust since 2007, would retire at the end of 2022. In July, he handed over lead manager responsibilities to Mike Seidenberg, who joined the trust’s research team in 2009. In March, when it was announced that Price was stepping down, a spokesperson for Allianz said Price “has no current plans to retire”.

There will be no change to the investment approach. Jeens said: “The board is pleased to have the continuity of portfolio management that comes from Seidenberg taking over the lead role and we look forward to working closely with him over the coming months and years.

“Seidenberg is a highly accomplished investor in his own right, but in his own words has, while working alongside Walter, been learning from a mentor who is undoubtedly a ‘legend’ of the sector.”

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In the first half of the year, one of the biggest contributors to the trust’s performance versus the benchmark was an underweight position in Facebook’s parent company, Meta Platforms. Meta shares fell around 50% over the reporting period due to slowing user growth and competition from video site TikTok.

Other wins for ATT were overweight positions in security software firms Crowdstrike and Palo Alto Networks.

Detractors to performance included data storage and analytics company Snowflake, cloud security company Zscaler, password management programme Okta, ride hailing firm Lyft, and an underweight to Apple.

Price and Seidenberg said: “The transition to a post-Covid economy has been complicated by a sharp rise in inflation, persistent supply chain challenges, and more hawkish central banks. However, we continue to expect technology to be the persistent driver of long-term economic growth.

“In our view, the technology sector continues to benefit from strong tailwinds, which should continue to drive attractive long-term appreciation. There is no question in our minds that the Covid-19 crisis has already spurred the use of technology and will continue to change how we live and work in the future.”

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The pair argue that labour shortages will spur demand for technology. They said: “As companies need to reduce costs and improve productivity, we expect to see accelerating demand for innovative and more productive solutions such as cloud, software-as-a-service, artificial intelligence and cyber-security. 

“We continue to believe the technology sector can provide some of the best absolute and relative return opportunities in the equity markets, especially for bottom-up stock pickers.”

Allianz Technology Trust has returned 730% over the past 10 years compared with a 497% return for the typical technology investment trust.