Tech Megatrends ETF Report | July 2024

Equal Weight ETF Key Takeaways

  • ITEK benefiting from broadening market gains, up 7.01% in June.
  • ITEK up 12% past 90 days (to July 12th). 45 Holdings gained 7%+ in June.
  • Tech Convergence and AI – boosting many ITEK holdings beyond Magnificent 7.
  • Social Media, Cloud, AI, Cybersecurity, EVs, Robotics, Streaming all interlinked – boosting usage & deals.
  • In June, Blockchain, Cloud, Digital Entertainment & Robotics/Automation (AI) were best performing subthemes.
  • Fast adoption of OpenAI, ChatGPT & BARD AI – boosting Global Cloud use and AI spend.
  • Equal weight across 8 subthemes (12.5% per theme; 120 total holdings, 15 per subtheme).
  • Potentially well positioned for broader Tech rally in 2024 beyond Mega-Caps.
  • Expect sizable M&A deal increases – across main ITEK holdings: Large-Caps, Mid-Caps & Small-Caps.
  • Healthy US economy boosting Tech spending & earnings.
  • Top Performers spread across all 8 subthemes – see below.
  • Continued low valuation multiples (P/E ratio, Price/Book & Price/Sales) – versus expensive Nasdaq. (Morningstar)
  • Top holdings equal weight – much broader than Nasdaq & many active Tech funds.
  • Global mix: US 59.9%, China 10.9%, Japan 7.9%, Canada 2.8%, & Australia 5.0%.
  • Unlike 100% US centric Nasdaq & many Tech Indices/Funds.
  • Top 15 leaders for each Megatrend subtheme – all established firms.
  • Top 5 holdings less than 9% weight; Top 10 under 15%. Nasdaq approaches 40% & 55% respectively.
  • Mega-Cap weight below 8% (Nasdaq 49%) – source Morningstar.

Source of all data: Gins Global / Bloomberg as of 30/06/2024. 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

  • Tech gains broadening beyond Mega-Caps as Fed rate cuts likely – helps equal weight approach.
  • Likely Fed rate cuts before year-end 2024, as inflation falling and unemployment rising.
  • Tailwind for Tech stock valuations beyond Magnificent7/FAANGs.
  • ITEK holdings still relatively cheap valuations, majority trading at PEs below 20X.
  • Many ITEK stocks remain below 2021 levels, undervalued versus Magnificent 7.
  • Big AI spending boosting Big Tech values & Cloud providers.
  • AI Convergence across Tech space – Cloud, Social Media, Gaming, Future Cars and Cybersecurity.
  • Over $2tn spending expected in AI within decade. Expect more M&A deals. (see chart)
  • Social Media boosted via gaming & video streaming to mobile (expected to double in 3yrs).
  • Online Gaming dominated by Mobile – boosting Digital Entertainment/Videos.
  • US Chips Act & $1tn Infrastructure Bill boosts EVs & big onshoring trend.

Source: Precedence Research. Chart displays expected data. For illustrative purposes only.

Subtheme Returns – June

ContributionContribution (%)Average Return (%)Sum of Weight (%)Count*
Blockchain4.4%31.3%15.2%15
Robotics & Automation0.4%-2.8%12.7%15
Genomics-0.4%-3.3%10.9%16
Cyber Security0.7%6.9%11.4%15
Future Cars-0.1%-0.9%11.6%15
Digital Entertainment0.7%6.2%12.3%15
Cloud Computing0.9%7.5%12.7%15
Social Media0.4%2.0%13.2%15
Total7.01%

*Count following rebalancing.

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

 Largest Contributors – June

HOLDINGSIndex CategoryContribution (%)Return (%)Average Weight (%)
TERAWULF INCBlockchain1.03%104.1%1.65%
CORE SCIENTIFIC INCBlockchain1.03%95.79%1.86%
HUT 8 CORPBlockchain0.63%72.80%1.12%
BITDEER TECHNOLOGIES GROUPBlockchain0.53%67.37%1.06%
IRIS ENERGY LTDBlockchain0.51%44.93%1.63%
ARM HOLDINGS ADRRobotics & Automation0.26%35.76%0.87%
GRINDR INCSocial Media0.28%28.84%0.98%
BIT DIGITAL INCBlockchain0.23%28.23%0.87%
SENTINELONE INCCyber Security0.13%25.07%0.53%
HIVE DIGITAL TECHNOLOGIES LTDBlockchain0.13%23.26%0.64%
RIVIAN AUTOMOTIVE INCFuture Cars0.19%22.89%0.84%
CLOUDFLARE INC – CLASS ACloud Computing0.13%22.37%0.62%
CROWDSTRIKE HOLDINGS INCCyber Security0.18%22.16%0.92%
ORACLE CORPCloud Computing0.18%20.49%0.97%
HEWLETT PACKARD ENTERPRISE COMPANYCloud Computing0.20%19.94%1.09%
CYBERARK SOFTWARECyber Security0.14%19.27%0.77%
DATADOG INCCloud Computing0.13%17.71%0.72%
SKYWORKS SOLUTIONS INCFuture Cars0.11%15.02%0.78%
PALO ALTO NETWORKS INCCyber Security0.12%14.95%0.82%
GALAXY DIGITAL HOLDINGS LTDBlockchain0.12%14.88%0.88%
BITFARMS LTD/CANADABlockchain0.10%14.61%0.75%
SAP SECloud Computing0.11%14.20%0.83%
MEDIATEKRobotics & Automation0.12%13.36%0.94%
ZSCALER INCCyber Security0.08%13.08%0.61%

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

Equal Weight ETF Performance
As of 30.06.2024

1M3M6MYTD12M3YSI
HAN-GINS Tech Megatrends Equal Weight UCITS ETF  7.01%2.20%4.46%4.46%14.16%-19.90%69.08%
Solactive Innovative Technologies Index (NTR)7.00%2.37%4.79%4.79%14.96%-19.13%73.01%

Please note that all performance figures are showing net data. Source: Bloomberg / HANetf. Data as of 30/06/2024

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.

* The SFDR classifications for the funds are documented in their respective supplements and approved by the Central Bank of Ireland. The supplement for each fund can be found on their respective product page.

 

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