The US tech fund that is still aiming for 20% returns: ALLIANZ TECHNOLOGY investment trust
Walter Price is confident that he can keep delivering stellar returns for those invested in the investment trust he runs – the £981million Allianz Technology, listed on London’s stock market.
Price, who runs the fund out of San Francisco with three colleagues, believes there is no reason why the trust cannot continue ‘shooting’ for compound annual returns in the region of 20 per cent – despite uncertainties caused by Covid-19 and the forthcoming US presidential election.
Confident that Democrat Joe Biden will win in the November vote, Price argues that ‘political change will be good for the market and for the economy’ – despite the threat at some stage of higher corporate taxes and raised personal taxes on the wealthy.
He adds: ‘I am hopeful that we can get into a less contentious political situation in the US. If Biden gets in, I can see a focus on stimulating the economy – more so than today. When Barack Obama won the presidency in 2009, the market responded favourably in that year and 2010. I can see the same happening with Biden.’
Although Allianz Technology is a global fund, 90 per of its assets are invested in companies listed in the US. Like all funds of its ilk, it has big holdings in giant American tech companies such as Apple and Microsoft that have performed strongly throughout the pandemic.
Yet Price has not been content to merely ride the technology wave. He has been constantly adjusting the 70-strong company portfolio to ensure it has the best chance to generate attractive returns. This resulted in some holdings – semiconductor stocks especially – being jettisoned as soon as Covid-19 became an issue.
More recently, he’s been content to take profits on some of the trust’s strongest performing shares such as electric car manufacturer Tesla and video conferencing business Zoom – that is, ‘trimming’ holdings rather than selling them altogether. Some of these profits have been invested in Expedia and Booking. com that Price describes as ‘economic recovery plays’.
While Price believes leisure travel will recover in the United States, he does not think the same about business trips. ‘Work is going to change next year,’ he says. ‘There will be a permanent shift towards remote working. More meetings will be conducted via video.’
This view is shown by the trust’s key holdings in both Zoom and Microsoft. It also has stakes in RingCentral and Twilio that both offer cloud computing services which enable businesses to be more efficient.
The trust’s performance is striking. Over the past year, it has delivered a return of 43 per cent while over three and five years it has generated profits (137 per cent and 307 per cent respectively) that are unsurpassed by any other investment trust monitored by Trustnet. The fund’s charges are reasonable at 0.92 per cent and will come down in percentage terms if the trust continues to grow.
James Carthew, head of investment trust research at fund analyst QuotedData, says Allianz Technology has delivered ‘excellent returns’ under Price’s leadership. But he believes investors interested in technology should look for a fund that is more globally invested.
He adds: ‘The trust’s portfolio is overwhelmingly focused on North American stocks. Trump’s anti-China policy notwithstanding, it is possible that many future technology giants will be Asian.’
Carthew’s preferred technology fund is Polar Capital Technology which has nearly a fifth of its portfolio invested in Japan and wider Asia.
Stock market identification codes: Allianz Technology: 0339072 ; Polar Capital Technology: 0422002.