How a different approach is helping this tech investment trust

Allianz Technology Trust Ord (LSE:ATT) delivered a strong net asset value (NAV) return of 24.7% in 2025, outpacing its benchmark, the Dow Jones World Technology Index by 4.7 percentage points in what marks another strong year of returns for tech stocks. The shareholder total return was marginally higher at 25.8% due to a slight narrowing of the discount.

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The numbers in detail:

NAV return: +24.7%
Share price total return: +25.8%
Benchmark return (Dow Jones World Technology index): +20%
Discount: 7.8% at the end of 2025 (versus 8.6% at the end of 2024)
Full-Year Dividend: Nil (no change)
Net Gearing: Nil

The trust’s differentiated strategy, with exposure to companies beyond the largest market capitalisations, contributed significantly to this outperformance, with notable contributions from Micron Technology Inc (NASDAQ:MU), Lam Research Corp (NASDAQ:LRCX), Celestica Inc Ordinary Shares (Subordinate Voting) (NYSE:CLS), Robinhood Markets Inc Class A (NASDAQ:HOOD), and Amphenol Corp Class A (NYSE:APH).

Outlook: With investor sentiment around artificial intelligence (AI) continuing to shift between optimism and concern, the company chair acknowledged that volatility is likely to remain a defining feature of the technology sector.

The investment team does not view current conditions as indicative of a bubble, although periods of market retreat are likely.

Geopolitical tensions and a shifting global landscape may also contribute to market swings. The management team remain retain a positive view on the innovation within AI, which continues to support growth and may create significant value over time.

Discount: The trust’s discount during the year narrowed from 8.6% to 7.8%. The board conducted a number of buybacks through the year, consistent with the policy of buying back shares when the discount is consistently over 7%. Overall levels of discounts across all trusts remain generally elevated when compared to history.

Portfolio: The portfolio remains focused on the United States, which accounts for more than 85% of the portfolio.

This reflects the continued strength and innovation of the US technology ecosystem, while maintaining selective exposure to global supply chains through companies such as Taiwan Semiconductor Manufacturing Co Ltd ADR (NYSE:TSM).

Sector allocation is led by semiconductors, which account for around one-third of the portfolio and were the strongest contributor to performance, with holdings including Micron Technology, Broadcom Inc (NASDAQ:AVGO) and Advanced Micro Devices Inc (NASDAQ:AMD).

Software remains a significant allocation at around a quarter of the portfolio, although the sector faced a more challenging year as investors reassessed growth prospects in light of AI.

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The portfolio also maintains meaningful exposure to cybersecurity and broader AI infrastructure providers.

Over the year, the managers initiated a new position in Robinhood Markets, which contributed 1 percentage point to relative performance in 2025. 

Gearing: The trust did not employ gearing during the period.

Dividend: ATT does not currently pay a dividend.

ii View

Allianz Technology Trust delivered another strong year of performance in 2025, outperforming its benchmark, the Dow Jones World Technology Index.

The portfolio returned 24.7% over the year, ahead of the benchmark’s 20%, resulting in relative outperformance of 4.7 percentage points.

Shareholders benefited slightly more, with a share price total return of 25.8%, helped by a modest narrowing of the discount to NAV.

Over the past three years the trust has generated cumulative returns exceeding 100%, highlighting the strength of the technology sector and the effectiveness of the trust’s differentiated investment approach.

One driver of performance was the portfolio’s positioning away from the largest mega-cap technology companies and towards mid and large-cap businesses benefiting from structural technology trends.

While large index constituents such as NVIDIA Corp (NASDAQ:NVDA) and Alphabet Inc Class A (NASDAQ:GOOGL) remained important contributors to the benchmark, the trust generated excess returns from higher weightings in companies such as Micron Technology, Lam Research, Celestica, Robinhood Markets and Amphenol.

In particular, semiconductor holdings were a major driver of returns, reflecting strong demand linked to AI infrastructure.

The semiconductor sector accounted for roughly one-third of the portfolio and delivered an average return of more than 45%, with Micron the single largest contributor to performance.

The portfolio continues to be positioned to capture opportunities across the wider AI ecosystem rather than concentrating solely on the most visible technology leaders.

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Around 47.5% of assets were invested in mega-cap companies, approximately 12 percentage points below the benchmark.

Mid-cap holdings made a meaningful contribution to returns. The managers also maintained exposure to other areas of structural growth, including cybersecurity and data centre infrastructure, with holdings such as CrowdStrike Holdings Inc Class A (NASDAQ:CRWD) and Palantir Technologies Inc Ordinary Shares - Class A (NASDAQ:PLTR) benefiting from rising demand for digital security and AI-driven analytics.

During the year, the team made relatively few portfolio changes, emphasising a long-term approach.

However, a new position was initiated in Robinhood Markets. Within cybersecurity, the trust reduced its overweight position slightly over the year, although the sector remains an important hunting ground for ideas.

The market environment during the year was characterised by strong technology performance but also notable volatility.

Geopolitical tensions, particularly around US trade policy and the announcement of tariffs during the “Liberation Day” episode, created periods of sharp market declines. Technology companies, with globally integrated supply chains, were particularly sensitive to these developments.

Nevertheless, the investment team largely maintained its positions through these periods, occasionally adding to favoured holdings when share prices weakened. More broadly, the managers note that earnings growth across the technology sector has remained robust, particularly among companies linked to AI, helping to support valuations despite heightened investor scrutiny.

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The trust continues to trade at a discount to NAV, reflecting wider pressures across the investment trust sector.

During the year, the average discount was approximately 9.8%, although it narrowed modestly to 7.8% by the end of the period from 8.6% a year earlier.

The board has remained active in addressing this through share buybacks, purchasing more than 26 million shares during the year.

However, the board has reiterated that buybacks are intended to manage discount volatility rather than enforce a permanent zero-discount policy, emphasising the importance of maintaining a stable pool of capital for long-term investment.

Charges remain competitive, with the ongoing charges figure declining slightly to 0.62%, maintaining the trust’s position as the lowest-cost option within its AIC sector peer group.

In addition, the board negotiated a reduction in the cap on performance fees from 1.75% to 1.25% of average NAV, effective from January 2026.

Despite the strong returns to shareholders over the year of 25.8%, some investors will be aware of the more impressive 33.1% return from Polar Capital Technology Ord (LSE:PCT), its closest AIC sector peer.

However, over the long term, ATT’s strong track record remains intact and it can boast a superior annualised 10-year return relative to PCT and the Dow Jones benchmark.

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Looking ahead, a continued broadening of market returns could stand to benefit ATT’s active approach and ability to be flexible in allocating based on the scale of the long-term opportunity ahead, not simply by market capitalisation.

In summary, AI continues to represent the dominant structural theme within technology markets, and the managers believe the current cycle resembles previous technological shifts that have historically created significant long-term value.

While volatility is expected to persist, driven both by shifting investor sentiment and geopolitical tensions, the team believes that continued innovation and strong demand for technology solutions should support earnings growth across the sector.

Against this backdrop, the trust aims to continue identifying opportunities across the broader technology ecosystem while maintaining a diversified portfolio capable of navigating an uncertain market environment.