Tech Megatrends ETF Report | October 2024

Equal Weight ETF Key Takeaways

  • ITEK returned 4.1% in September.
  • Federal Reserve’s large 0.50% rate cuts a potentially positive tailwind for ITEK.
  • ITEK P/E valuations remain below 20, attractive vs Nasdaq above 30X.
  • For 2024, best subthemes Digital Entertainment, Cloud, Cybersec, AI-Robotics & Blockchain.
  • For September – Social Media, Blockchain, Digital Entertainment, Future Cars & Cloud best performers. Blockchain a laggard.
  • Global mix: US 58.7%, China 10.4%, Japan 8.4%, South Korea 3.5%, & Australia 3.4%.
  • Unlike 100% US centric Nasdaq & many Tech Indices/Funds.
  • Fast adoption of OpenAI, ChatGPT & BARD AI – continues boosting Cloud Computing and AI spend.
  • Equal weight across 8 subthemes (12.5% per theme; 120 total holdings, 15 per subtheme).
  • Tech Convergence and AI – boosts broader Tech gains across ITEK holdings, beyond Magnificent 7.
  • Social Media, Cloud, AI, Cybersecurity, EVs, Robotics, Streaming interlinked – boosting usage & deals.
  • ITEK potentially well positioned for broader Tech rally in 2024 beyond Mega-Caps.
  • Soft landing should help Tech spending & earnings as economic confidence grows.
  • Top 15 leaders for each Megatrend subtheme – all established firms.
  • Top 5 holdings less than 10% weight; Top 10 under 14%. Nasdaq approaching 40% & 55% respectively.
  • Mega-Cap weight still below 8% (Nasdaq 49%) – source Morningstar.
  • Equal Weight top holdings – offers broader diversity vs. Nasdaq & many active Tech funds.

Source of all data: Gins Global / Bloomberg as of 30/09/2024. 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

  • Big Fed rate cuts boosting M&A deals – across key ITEK holdings: Large-Caps, Mid-Caps & Small-Caps.
  • Tech gains broadening beyond Mega-Caps as Fed rate cuts likely – helps equal weight approach.
  • Two more Fed rate cuts before year-end 2024 – inflation falling and unemployment rising.
  • Tailwind for Tech stock valuations beyond Magnificent7/FAANGs.
  • US Chips Act & $1tn Infrastructure Bill boosts EVs & big onshoring trend.
  • Big AI spending boosting Big Tech values & Cloud providers.
  • AI Convergence across Tech space – positive for Cloud, Social Media, Gaming, Future Cars & Cybersecurity.
  • Over $2.5tn spending in AI expected within decade, potentially boosting Cloud spending to $2bn+ too.
  • ITEK holdings still relatively cheap valuations, majority trading at PEs below 20X.
  • Many ITEK stocks remain below 2021 levels, undervalued versus Magnificent 7.
  • Social Media boosted via gaming & video streaming to mobile (expected to double in 3yrs).
  • Online Gaming dominated by Mobile – boosting Digital Entertainment/Videos.

Subtheme Returns – September

ContributionContribution (%)Average Return (%)Sum of Weight (%)
Blockchain1.03%5.37%13.34%
Robotics & Automation-0.07%-1.14%12.42%
Genomics0.24%0.90%14.54%
Cyber Security0.21%0.91%13.70%
Future Cars0.42%2.68%12.52%
Digital Entertainment0.51%2.65%13.30%
Cloud Computing0.99%7.14%13.82%
Social Media0.75%4.62%15.82%
Total4.08%

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

Largest Contributors – September

HOLDINGSIndex CategoryContribution (%)Return
(%)
Average Weight (%)
KUNLUN TECH CO LTD-ASocial Media0.33%38.25%0.67%
LI AUTO INC-CLASS AFuture Cars0.27%37.10%0.54%
RANGE INTELLIGENT COMPUTING TECHCyber Security0.30%34.21%0.79%
ALIBABA GROUP HOLDING-SP ADRCloud Computing0.23%27.33%0.95%
BAIDU INC-CLASS ASocial Media0.23%27.31%0.75%
BAIDU INC – SPON ADRCloud Computing0.20%24.43%0.76%
BEIGENE LTDGenomics0.21%23.78%0.92%
TESLA INCFuture Cars0.19%22.19%0.93%
HUT 8 CORPBlockchain0.19%21.38%1.00%
ORACLE CORPCloud Computing0.21%20.60%1.09%
BITDEER TECHNOLOGIES GROUPBlockchain0.16%19.72%0.85%
TRUMP MEDIA & TECHNOLOGY GROUP CORPSocial Media0.11%18.60%0.61%
NETEASE INCDigital Entertainment0.16%17.85%0.66%
BYD CO LTDFuture Cars0.16%17.66%0.98%
GALAXY DIGITAL HOLDINGS LTDBlockchain0.14%17.46%0.87%
CORE SCIENTIFIC INCBlockchain0.34%14.92%1.95%
SNAP INCSocial Media0.11%14.56%0.75%
DRAFTKINGS INCDigital Entertainment0.09%13.62%0.76%
LG CHEM LTDFuture Cars0.12%12.64%0.90%
KONAMI GROUP CORPDigital Entertainment0.13%10.65%1.09%

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

Equal Weight ETF Performance
As of 30.09.2024

ITEK (Fund)SOLITEK (Index)
1M5.23%5.28%
3M-11.01%-10.94%
6M14.22%14.59%
YTD12.25%12.76%
12M13.93%14.76%
3Y72.48%75.38%
Since Inception (05/10/2018)149.13%157.62%

Please note that all performance figures are showing net data. Source: Bloomberg / HANetf. Data as of 30/09/2024

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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