Technology stocks may not be loved by everyone, and prone to wild swings in market sentiment, but they remain one of the most exciting investment themes.
That’s the view of Mike Seidenberg, manager of £1.4 billion investment trust Allianz Technology, who runs the fund from San Francisco – the world’s tech epicentre.
Although high market expectations mean tech share values can plummet when earnings disappoint – as happened recently with Tesla, Microsoft and Alphabet – Seidenberg says it is key for investors to cut out the white noise and think long-term.
‘As a technology fund manager, there is never a dull moment,’ he says – Friday’s turmoil is a case in point. ‘But my job is to play the long-term game. I want to find companies that matter over multiple years and not just in the big company space.’
The portfolio is heavily invested in six of the ‘magnificent seven’ tech stocks – Alphabet, Amazon, Apple, Meta, Microsoft and Nvidia. The exception is Tesla which failed to impress the market, with recent figures indicating modest growth.
But as Seidenberg says, the trust is not just about big tech. The fund holds about 40 other companies, most US-listed, and many with head offices near where Seidenberg and his team are based.
Identifying key tech themes is crucial, the manager says. Apart from artificial intelligence – Nvidia is the trust’s biggest holding – Seidenberg is excited by the growth in cyber security. ‘It’s a crucial part of the drive towards a world which is fast embracing digitalisation,’ he adds.
One of the fund’s key holdings is CyberArk, a US-listed company which helps major businesses to defend themselves against cyber attacks from fraudsters or hostile criminal organisations.
The company has recently posted healthy quarterly results, with revenues up 37 per cent year on year. Its share price is up more than 18 per cent this year.
‘It has developed a system that enables firms to protect data from cyber security attacks, malware and hacking threats,’ says Seidenberg. ‘From an investment perspective, it’s working in a tech area that will be around long after I have stopped being a fund manager.
‘CyberArk is also not a mainstream tech stock. Its market capitalisation of $10.9 billion [£8.5 billion] is a fraction of Nvidia’s [$2.6 trillion], so it’s off the radar of many investors.’
Seidenberg is also enthralled by the proliferation of semiconductors in our everyday lives. Monolithic Power Systems, a leading semiconductor company, is a top 10 holding. ‘It’s one of the first companies I bought when I took over the trust’s management in summer 2022,’ says Seidenberg. ‘It was set up in 1997 by engineer Michael Hsing and he’s still running the show.
‘From an investor perspective, I like founder-based companies. Monolithic is the kind of company the trust can own for multiple years.’
Another compelling theme is the ‘cloud’ – all the things that can be accessed over the internet. A key holding in this area is cloud monitoring specialist Datadog. Although its share price has gone sideways this year, Seidenberg is confident the company’s revenues – up 27 per cent, year on year – will continue to grow.
In the past year, the trust has delivered an attractive return of 35 per cent. Yet it’s investing in a sector where sentiment can change abruptly – the fund’s three-year numbers are inferior to those over the past year.
For broad exposure to tech, it’s a sound option. Annual management charges are a competitive 0.7 per cent with the scope to fall in percentage terms as the trust’s assets increase in value. The stock market identification code is BNG2M15 and ticker ATT.
DIY INVESTING PLATFORMS
AJ Bell
AJ Bell
Easy investing and ready-made portfolios
Hargreaves Lansdown
Hargreaves Lansdown
Free fund dealing and investment ideas
interactive investor
interactive investor
Flat-fee investing from £4.99 per month
Saxo
Saxo
Get £200 back in trading fees
Trading 212
Trading 212
Free dealing and no account fee
Affiliate links: If you take out a product This is Money may earn a commission. These deals are chosen by our editorial team, as we think they are worth highlighting. This does not affect our editorial independence.
