Tech Megatrends ETF Report | June 2024

Equal Weight ETF Key Takeaways

  • Market rebounded in May, with tech gains broadening.
  • ITEK at centre of tech convergence and AI – broad exposure beyond Magnificent 7.
  • Social media, cloud, AI, cybersecurity, EVs, robotics, streaming all interlinked – boosting usage and deals.
  • Fast adoption of OpenAI – ChatGPT and BARD AI – boosts cloud usage and AI spend.
  • Equal weight across 8 subthemes (12.5% per theme; 120 total holdings, 15 per subtheme).
  • ITEK returned 3.6% in May.
  • Potentially well positioned for broader tech rally in 2024 beyond mega-caps.
  • We expect sizeable M&A deal increases across main ITEK holdings: large-caps, mid-caps, and small-caps.
  • Healthy US economy boosting tech spending and earnings.
  • In May, blockchain, future cars, digital entertainment, and robotics & automation (AI) have been our best subthemes, followed by social media and cloud.
  • Continued low valuation multiples (P/E ratio, Price/Book, and Price/Sales) versus Nasdaq.
  • Top holdings equal weight – far broader than Nasdaq and many active tech funds.
  • Global mix: US 58.5%, China 11.9%, Japan 8.6%, Australia 4.5%, Germany 2.9%.
  • Not 100% US centric – unlike Nasdaq and other tech indices/funds.
  • Top 15 leaders for each megatrend subtheme – all established firms.
  • Top 5 holdings less than 9% weight: top 10 under 12%. Nasdaq approaches 38% and 53% respectively.
  • Mega-cap weight under 8% (Nasdaq 49%).

Source of all data: Gins Global / Bloomberg as of 31/05/2024. Additional sources available upon request. Please note that all performance figures are showing net data. Past performance is not indicative of future performance and when you invest in ETFs, your capital is at risk.

Macro Outlook

  • Broader Tech rally beginning – enjoying positive rerating, beyond Magnificent 7.
  • Likely Fed rate cuts by end of 2024 as property market and consumer spend weakening.
  • Tailwind for disruptive tech stock valuations.
  • ITEK holdings outside of Magnificent 7, still relatively cheap and yet to run.
  • Majority of tech stocks remain below 2021 levels, undervalued versus Magnificent 7.
  • Big AI spending boosting big tech values and cloud providers.
  • AI Convergence across tech – cloud, social media, gaming, future cars and cybersecurity.
  • Over $2tn spending in AI expected within the decade. Expect more M&A deals.
  • Low P/Es – attractive valuations. Quality megatrend holdings amongst lowest P/Es in years.
  • Online gaming dominated by mobile – boosting digital entertainment/videos (see chart).
  • Social media boosted via gaming and video streaming to mobile (expected to double in 3yrs).
  • US Chips Act and $1tn Infrastructure Bill boosts EVs and onshoring IT trend.

Source: Meltwater. For illustrative purposes only.

Subtheme Returns – May

ContributionContribution (%)Average Return (%)Sum of Weight (%)Count*
Blockchain1.67%16.21%11.82%15
Robotics & Automation0.98%7.35%12.57%15
Genomics-0.39%-3.62%12.09%15
Cyber Security-0.45%-4.03%12.00%15
Future Cars0.54%6.62%12.18%15
Digital Entertainment0.71%5.19%12.27%15
Cloud Computing0.21%0.78%13.03%15
Social Media0.38%2.84%14.04%15
Total3.58%

*Count following rebalancing.

Source of all data: Solactive. Past performance is no guarantee of future performance.

 

Largest Contributors – May

HOLDINGSIndex CategoryContribution (%)Return (%)Average Weight (%)
VINFAST MANUFACTURING & TRADINGFuture Cars0.34%91.02%0.59%
IRIS ENERGY LTDBlockchain0.52%79.49%0.88%
CORE SCIENTIFIC INCBlockchain0.43%62.12%0.90%
NVIDIA CORPRobotics & Automation0.26%26.89%1.03%
BITFARMS LTD/CANADABlockchain0.14%25.20%0.56%
MEDIATEKRobotics & Automation0.19%24.50%0.83%
PINTEREST INCSocial Media0.19%24.04%0.96%
QUALCOMM INCRobotics & Automation0.21%23.03%1.03%
RIVIAN AUTOMOTIVE INCFuture Cars0.16%22.70%0.77%
BIO-TECHNE CORPGenomics0.17%22.12%0.91%
BIT DIGITAL INCBlockchain0.15%21.87%0.76%
MARATHON DIGITAL HOLDINGS INCBlockchain0.12%21.54%0.64%
ARM HOLDINGS ADRRobotics & Automation0.12%19.08%0.67%
NETAPP INCCloud Computing0.18%17.83%1.05%
APTIV PLCFuture Cars0.14%17.27%0.87%
PELOTON INTERACTIVE INCSocial Media0.10%17.04%0.68%
NETFLIX INCDigital Entertainment0.13%16.52%0.87%
BUMBLE CL A ORDSocial Media0.12%15.84%0.83%
GALAXY DIGITAL HOLDINGS LTDBlockchain0.12%14.96%0.79%
KONAMI GROUP CORPDigital Entertainment0.12%14.77%0.84%
RENAULT SAFuture Cars0.17%14.63%1.09%
METTLER-TOLEDO INTLGenomics0.12%14.18%0.95%
APPLE INCCloud Computing0.11%12.87%0.87%

Source of all data: Solactive. Past performance is no guarantee of future performance.

Equal Weight ETF Performance
As of 31.05.2024

1M3M6MYTD12M3YSI
HAN-GINS Tech Megatrends Equal Weight UCITS ETF  3.58%-2.84%9.48%-2.38%13.01%-21.60%58.01%
Solactive Innovative Technologies Index (NTR)3.65%-2.63%9.91%-2.06%13.90%-20.80%61.70%

Please note that all performance figures are showing net data. Source: Bloomberg / HANetf. Data as of 31/05/2024

Performance before inception is based on back tested data. Back testing is the process of evaluating an investment strategy by applying it to historical data to simulate what the performance of such strategy would have been. Back tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance. Past performance for the index is in USD. Past performance is not an indicator for future results and should not be the sole factor of consideration when selecting a product. Investors should read the prospectus of the Issuer (“Prospectus”) before investing and should refer to the section of the Prospectus entitled ‘Risk Factors’ for further details of risks associated with an investment in this product. When you invest in ETFs and ETCs, your capital is at risk.

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