The £1bn Allianz Technology trust (ATT) has repositioned the portfolio to be more value orientated as part of a raft of changes introduced since new lead manager Mike Seidenberg took the reins in July.
His appointment followed the retirement of long-standing fund manager Walter Price, who had been at the helm of the trust for nearly 15 years, and colleague Huachen Chen at the end of this year.
The portfolio, which is typically concentrated in 40 to 70 mid-cap growth names, has sold and reduced many of its positions in the last year and a half amid concerns for the macroeconomic environment that triggered the sell-off in technology stocks in 2022.
"We have very much changed the portfolio from one that was more focused on higher growth, more mid-cap companies to going towards a more value orientation. The portfolio that we had in 2020 is materially different from the portfolio we have today," Seidenberg said.
"The changes are evolutionary, not revolutionary. But definitely there were some remnant positions that were difficult for me to underwrite," he said.
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Since he took over the fund, Seidenberg got rid of its exposure to China. He also trimmed the positions in "commoditised" semiconductor players, such as Infineon Technologies, as he saw more potential for specialised semiconductor firms to navigate a tough macro environment.
"We went through name by name and asked ourselves: 'Is this a must have, nice to have or not need?' Decisions were made around that earlier in the beginning of this year. We did not move fast enough," he added.
Despite being a "big Tesla fan", which is reflected in the fund's considerable overweight position in the stock, Seidenberg said the holding had been reduced in the last quarter due to the heightened volatility around the stock.
"If I thought our investors had a ten-year time horizon on our fund, I would have no problem having a larger position as we did, but it was really around risk control. It is still one of our largest active overweights, but I wanted to take it down from an absolute size perspective," he said.
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Concerns over Tesla's chief executive Elon Musk's Twitter venture were also a factor behind the trim, despite the team's high conviction for the product and the synergy between electric vehicles and the technology the company provides.
"Elon Musk himself is always a concern," he said.
"Do I think that if he dropped dead tomorrow, which I hope for his family's sake he does not, would I reconsider owning the stock? Probably."
These positions were reinvested in players such as cybersecurity company Fortinet, payroll firm Paycom, dating app Bumble and more value-orientated players such as Visa and Mastercard.
"Visa and Mastercard are very profitable businesses. They are not going to grow 40%, there is no chance, but they have very predictable growth rates," he said.
In the last decade, the trust has returned 636%, while the IT Technology and Media sector is up 438.6%, according to data from FE fundinfo.
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This year, however, performance has taken a hit due to the market rotation away from growth stocks. Year-to-date, ATT is down 34.8%, while the IT Technology and Media sector has lost 25.7%.
Looking ahead, Seidenberg said that the team will be much more selective with the fund's high growth investments, paying much more attention to how businesses react to the changes in cost of capital as a result of higher interest rates.
"In the future, there will be haves and have nots with respect to higher growth. Some of the companies that you saw growth in, you may not see it for a long time again, as they may have benefited one time from a massive pull forward that is not really replicable," he said.
