Tech Megatrend ETF Report | May 2024

Equal Weight ETF Key Takeaways

  • ITEK at centre of tech convergence and AI – broad exposure beyond Magnificent 7.
  • 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 -7.8% in April.
  • Potentially well positioned for broader tech rally in 2024.
  • Benefits as global digital convergence increases M&A deals. More deals likely in 2024 across mid-caps & smaller caps.
  • Robust US economy helps boost tech earnings broadly – ITEK potentially well positioned beyond mega-caps.
  • Social media, cloud, AI, cybersecurity, EVs, robotics, streaming all interlinked – boosting usage and deals.
  • For 2024, digital entertainment & robotics/automation (AI) have been our best subthemes, followed by cybersecurity, cloud, and social media.
  • Far lower valuation multiples (P/E ratio, Price/Book, and Price/Sales) versus Nasdaq.
  • Top holdings equal weight – far broader than Nasdaq and barrow active tech funds.
  • Global mix: US 57.9%, China 13.3%, Japan 8.5%, Australia 3.7%, Germany 3.1%.
  • 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 8% weight: top 10 just total 11.3%. Nasdaq approaches 37% & 52% respectively.
  • Mega-cap weight under 7% (Nasdaq 49%).

Source of all data: Gins Global / Bloomberg as of 30/04/2024. 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

  • Likely Fed rate cuts by end of 2024 as job growth and consumer sentiment are weakening.
  • Potential tailwind for disruptive tech stock valuations.
  • Outside of Magnificent 7, most holdings not in a bull market.
  • We expect lower rates will boost broader bull market into 2025.
  • Big AI spending boosting big tech values and cloud providers.
  • Broader Tech rally beginning – enjoying positive rerating, beyond Magnificent 7.
  • AI Convergence across tech – cloud, social media, gaming, future cars and cybersecurity.
  • Majority of tech stocks remain below 2021 levels, undervalued versus Magnificent 7.
  • 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.

Tech megatrends

Source: Nova Advisor. For illustrative purposes only. Chart displays expected data.

Subtheme Returns – April

ContributionContribution (%)Average Return (%)Sum of Weight (%)Count*
Blockchain-2.9%-20.9%11.9%15
Robotics & Automation-0.9%-6.4%12.5%15
Genomics-1.0%-8.5%12.4%15
Cyber Security-0.5%-4.9%12.3%15
Future Cars-0.8%-6.4%12.0%15
Digital Entertainment-0.8%-5.7%12.3%15
Cloud Computing-0.6%-4.7%13.1%15
Social Media-0.2%-1.6%13.5%15
Total-7.7%

 

*Count following rebalancing.

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

Largest Contributors – April

HOLDINGSIndex CategoryContribution (%)Return (%)Average Weight (%)
SNAP INCSocial Media0.26%31.10%0.92%
PB FINTECH LTDSocial Media0.10%12.51%0.91%
HANSOH PHARMACEUTICAL GROUP COGenomics0.11%12.40%1.01%
FANUC CORPRobotics & Automation0.05%10.56%0.84%
DELL TECHNOLOGIES INC – CCloud Computing0.09%9.23%1.12%
ALPHABET INC-CL ASocial Media0.07%7.85%0.98%
BYD CO LTDFuture Cars0.06%6.94%0.92%
SPOTIFY TECHNOLOGY SADigital Entertainment0.05%6.27%0.98%
CACI INTERNATIONAL INC -CL ACyber Security0.05%6.18%0.87%
LIFE360 INC-CDISocial Media0.06%5.19%1.41%
TESLA INCFuture Cars0.03%4.26%0.71%
SUMITOMO ELECTRIC INDUSTRIES LTDFuture Cars0.00%3.98%0.90%
ALIBABA GROUP HOLDING-SP ADRCloud Computing0.03%3.44%0.85%
NXP SEMICONDUCTOR NVFuture Cars0.03%3.40%0.82%
MICROCHIP TECHNOLOGY INCRobotics & Automation0.02%2.53%0.90%
PALO ALTO NETWORKS INCCyber Security0.02%2.38%0.78%
BAIDU INC-CLASS ASocial Media0.02%1.95%0.86%
DATADOG INCCloud Computing0.01%1.54%0.82%
RANGE INTELLIGENT COMPUTINGCyber Security0.01%1.29%0.95%
TEXAS INSTRUMENTS INCFuture Cars0.01%1.27%0.88%
KEYENCE CORP ORDRobotics & Automation-0.02%1.09%0.79%
JIANGSU HENGRUI MEDICINE CO LTDGenomics0.01%0.41%0.90%
KUNLUN TECH CO LTD-ASocial Media0.00%0.33%0.86%
RENAULT SAFuture Cars-0.01%-0.12%1.08%
SNAP INCSocial Media0.26%31.10%0.92%
PB FINTECH LTDSocial Media0.10%12.51%0.91%
HANSOH PHARMACEUTICAL GROUP COGenomics0.11%12.40%1.01%
FANUC CORPRobotics & Automation0.05%10.56%0.84%
DELL TECHNOLOGIES INC – CCloud Computing0.09%9.23%1.12%
ALPHABET INC-CL ASocial Media0.07%7.85%0.98%

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

Equal Weight ETF Performance
As of 30.04.2024

1M3M6MYTD12M3YSI
HAN-GINS Tech Megatrends Equal Weight UCITS ETF  -7.79%1.97%19.79%-5.75%15.92%-26.86%52.56%
Solactive Innovative Technologies Index (NTR)-7.69%2.25%20.37%-5.51%16.85%-26.13%56.00%

Please note that all performance figures are showing net data. Source: Bloomberg / HANetf. Data as of 30/04/2024

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.

How to Buy