ALLIANZ TECHNOLOGY TRUST

Investment Process

The Global Technology team believes that the technology sector is entering a ‘golden age’, as demand for products is robust and revenue growth remains strong. They try to identify technology companies, mainly a combination of high-quality leaders and tech innovators, with the potential to ride major trends to become much bigger and more important. The investment ideas are generated by the portfolio managers, Allianz Global Investors’ research analysts, and Allianz’s Grassroots Research, as well as externally from Wall Street analysts and meetings with thousands of company management teams every year. The Allianz Global Investors research staff follows an initial technology universe of approximately 1,500 stocks whose revenues are primarily generated by technology products and services. These include the internet, software, electronic components and systems, semiconductors, media and information services, biotechnology products, chemical products and synthetic materials, and defence and aerospace products. The team initially identifies technology subsectors that it believes will experience high growth and then performs bottom-up, fundamental research to assess company product positioning and leadership. Companies are evaluated on two major factors – growth and quality. The team seek market leaders with significant barriers to entry, proprietary products or services and favourable cashflow generation outlooks. They also look at profit margins and potential for expansion, balance sheet health and the reliability of company management in delivering results above expectations. Valuation is also considered, with the team looking at factors such as price-to-cash flow and book value to evaluate what they are paying for the company’s growth. The portfolio is broadly split into 3 buckets: • High growth innovators with projected sales growth of more than 20% per year. • Growth at a Reasonable Price or GARP names: Companies with established market and expansion potential and current and projected sales growth of typically more than 15% per year. • Attractively valued opportunities: total return is the focus here and holdings might typically be incumbents who can emerge again as growth companies or undergo consolidation to create shareholder value.