Monthly Tech Megatrend ETF Report | February

Tech Megatrends ETF Key Takeaways

  • ITEK globally well diversified – underweight FAANGS & Magnificent 7.
  • Equal weight across 8 subthemes (12.5% per theme; 120 total holdings, 15 per subtheme).
  • ITEK broader than GICS classification – includes EVs, Gaming/Streaming, Social Media (excluded by Tech Indices).
  • ITEK retreated -7.6% in January following 45.7% in 2023.
  • Well positioned for broader Tech rally in 2024.
  • Benefits as Global Digital convergence increases – large M&A deals likely in 2024.
  • Social Media, Cloud, AI, Cybersecurity, EVs, Robotics, Streaming all interlinked – boosting usage & deals.
  • Best Subthemes 2023: Blockchain 19.4%, Robotics & Automation 6.8%, Genomics -0.6%, Cyber Security 5.6%, Future Cars 2.3%, Digital Entertainment 4.9%, Cloud Computing 5.0%, Social Media 3.3%.
  • Far lower P/E ratio, Price/Book & Price/Sales – versus Nasdaq.
  • Top holdings equal weight – so far less concentrated than Nasdaq & most Tech funds in FAANGS.
  • Global mix: US 60.9%, China 10.7%, Japan 8.3%, Germany 4.1%, Canada 2.7% & Australia 3.1%.
  • Unlike almost 100% US centric Nasdaq & other Tech Indices/Funds.
  • Top 15 leaders for each Megatrend subtheme – all established firms.
  • Top 5 holdings less than 8% weight; Top 10 under 15%. Nasdaq approaches 37% & 52% respectively.
  • Mega-Cap weight under 7% (Nasdaq 49%).

Source of all data: Gins Global / Bloomberg as of 31/01/2024. 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

  • Majority of tech stocks below 2021 levels, undervalued versus Magnificent 7.
  • Convergence of Tech across, AI, Cloud, Social Media, Gaming and Cybersecurity.
  • Big AI spending boosting Big Tech values & Cloud providers.
  • Over $2tn spending in AI expected within this decade. Expect more M&A deals.
  • Upcoming Fed rate cuts – tailwind for disruptive Tech stock valuations.
  • Broader Tech rally beginning – enjoying positive rerating, beyond Magnificent 7.
  • 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 & video streaming to mobile (expected to double in 3yrs).
  • US Chips Act & $1tn Infrastructure Bill boosts EVs and onshoring IT trend.
  • Fast adoption of OpenAI – ChatGPT & BARD AI – boosts Cloud usage.
  • EVs more mainstream across Europe & US – 15% planned within 2yrs with US big subsidies.
  • Blockchain rerating as tokenization ledger adoption to increase in financial services.

Source of all data: Gins Global / Bloomberg as of 31/01/2024. 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.

Subtheme Returns – January

 

ContributionContribution (%)Average Return (%)Sum of Weight (%)
Blockchain-4.83%-26.64%15.86%
Robotics & Automation-0.23%-0.05%13.67%
Genomics-0.61%-5.75%10.21%
Cyber Security-0.02%-1.24%14.19%
Future Cars-1.70%-17.19%9.48%
Digital Entertainment0.48%6.53%12.25%
Cloud Computing0.25%1.78%12.07%
Social Media-0.94%-7.56%12.37%

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

 

Largest Contributors – January

HOLDINGSIndex CategoryContribution (%)Return (%)Average Weight (%)
NVIDIA CORPRobotics & Automation0.19%24.24%0.93%
CROWDSTRIKE HOLDINGS INCCyber Security0.17%14.56%1.40%
PALO ALTO NETWORKS INCCyber Security0.14%14.80%1.08%
SPOTIFY TECHNOLOGY SADigital Entertainment0.14%14.60%1.08%
NETFLIX INCDigital Entertainment0.14%15.86%0.95%
KONAMI GROUP CORPDigital Entertainment0.13%23.61%0.82%
CAPCOM CO LTDDigital Entertainment0.11%23.90%0.70%
SAP SECloud Computing0.11%15.29%0.94%
IBM CORPCloud Computing0.10%12.30%0.95%
INTUITIVE SURGICAL INCRobotics & Automation0.10%12.11%0.94%
DRAFTKINGS INCDigital Entertainment0.10%10.78%0.99%
MARVELL TECHNOLOGY INCRobotics & Automation0.10%12.25%0.92%
META PLATFORMS INCSocial Media0.09%10.22%1.03%
TREND MICRO INCCyber Security0.08%12.67%1.06%
NINTENDO CO LTDDigital Entertainment0.08%12.92%1.02%
SERVICENOW INCCloud Computing0.08%8.34%1.02%
FORTINET INCCyber Security0.08%10.18%0.84%
ZSCALER INCCyber Security0.07%6.37%1.20%
CYBERARK SOFTWARECyber Security0.07%6.59%1.11%
SALESFORCE INCCloud Computing0.06%6.82%1.00%
NORTHERN DATA AGBlockchain0.06%6.46%1.32%
MICROSOFT CORPCloud Computing0.05%5.73%0.97%

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

Tech Megatrends ETF Performance

As of 31.01.2024

1M3M6MYTD12M2Y3YSI
HAN-GINS Tech Megatrends Equal Weight UCITS ETF  -7.57%17.47%-7.36%-7.57%16.22%-13.59%-22.54%49.61%
Solactive Innovative Technologies Index (NTR)-7.59%17.72%-7.08%-7.59%17.13%-13.28%-21.99%52.57%

Please note that all performance figures are showing net data. Source: Bloomberg / HANetf. Data as of 31/01/2024

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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