person using credit card to pay for something on their phone

Here's an overview of the main technology ETFs listed on the Australia Securities Exchange.

It's indisputable that we are in an era of technology. Can there be any dispute? If you aren't reading this on a home computer (unthinkable in 1970), you're probably using a smart phone (the Nokia 9000 Communicator was the first phone that could access the internet in 1996), and it is obvious that our technological capabilities are exponentially increasing.

Apple's (NASDAQ:AAPL) meteoric rise is just as well-known and needs no elaboration. The fact of the matter is that technology companies are the present and they are they future. For any investor, the tech sector is obviously a desirable investment opportunity.

For those unfamiliar, an ETF, or exchange-traded fund, is a basket of securities, traded like a stock on an exchange. They come in many different types (market ETFs, foreign market ETFs, commodity ETFs and so on). Advantages include lower expense ratios, diversification and fewer broker commissions. One disadvantage is a low level of liquidity.


Here, the Investing News Network looks specifically at Australian tech sector ETFs, for those interested in investing in the bright, digital future.

The technology sector in Australia

Fast-growing and already robust, the tech sector in Australia rests just behind mining and banking as the third largest industry in the country. Not only is the tech sector the third-largest industry, it is also the fourth-largest export, worth AU$8 billion.

As of 2021, Australia ranked 20th across the world for digital competitiveness. Unfortunately, that's the lowest it has ever been.

So, what does that mean for the future of the tech sector? Well, it's time for some good news/bad news. The bad news is the low global ranking.

But, while a record low is hardly promising, there is a silver lining to this cloud. According to an Australian government report from August 2021, the sector has experienced a rapid amount of growth recently, a trend which looks to continue exponentially into the future. Australian tech also performed well in terms of technology adoption. The Australian government has ambitious plans to expand the tech industry, and aim to greatly increase Australia's contributions to technologies by 2030.

Investing in ETFs on the ASX

How do you invest in an ETF? Well, one of the advantages of an ETF is the ability to buy and sell at any time of the day. Other mutual funds trade at the end of the day.

One thing to watch out for with ETF investment is portfolio duplication. If your own portfolio is diverse, make sure you aren't going to create a redundancy with an ETF. Check your total exposure in a given sector, don't just check the exposure given by the ETF.

ETFs, by their nature, offer diverse or somewhat diverse portfolios to investors. They’re a “basket of securities,” which means that these groups can interact with more than one sector. If you are looking to invest in technologies and in the tech sector, these are the best ways to do that. Here’s an overview of the technology ETFs listed on the ASX as of May 10, 2022.

ETFS Morningstar Global Technology

Market cap: AU$344 million; year-to-date loss: 16.11 percent; current share price: AU$89.51

All of the holdings of the ETFS Morningstar Global Technology ETF (ASX:TECH) are in the tech sector. Although it does have holdings in several countries, the lion's share comes from the United States at around 78 percent. The company says it has no regional bias, however, and is simply focused on computer, internet and communications stocks.

Betashares Global Cybersecurity

Market cap: AU$717 million; year-to-date loss: 2.79 percent; current share price: AU$10.44

Betashares (ASX:HACK) specifically specializes in cyber security, a market which will protect and enhance other tech companies' offerings. This stock has only slightly less allocated to the tech sector than ETFS Morningstar: 94 percent. Of that 94 percent, half is focused on systems software. Everybody needs antivirus, anti-spyware, anti-malware and other forms of protection against malicious code, so it might be an interesting option for investors to look into.

Betashares Cloud Computing

Market cap: AU$54 million; year-to-date loss: 20.55 percent; current share price: AU$11.83

This ETF's (ASX:CLDD) distribution has 78.88 percent going into the tech sector; 50 percent of its sector allocation is in application software (apps). "The cloud" seems as ubiquitous as its name implies, if not quite as omnipresent as its ambitions have aimed, and this ETF allows an investor to invest in the idea that this is the way of the future for storage. Some computer types are even based on the idea of the cloud, such as Chromebooks.

Betashares S&P/ASX Australian Technology

Market cap: AU$163 million; year-to-date loss: 17.01 percent; current share price: AU$19.56

S&P/ASX (ASX:ATEC) has a lower percentage of holdings devoted to the tech sector — just sitting above half at 57.72 percent. Of these holdings, around 95 percent are in IT and communications services.

 Betashares NASDAQ 100

Market cap: AU$104 million; year-to-date loss: 12.46 percent; current share price: AU$32.04

The first entry here to dip below 50 percent, the NASDAQ 100 ETF (ASX:HNDQ) devotes just 49.02 percent of its holdings to technology, with the next-highest category, communication services, ranking at 18.85 percent.

Betashares Asia Technology Tigers

Market cap: AU$547 million; year-to-date loss: 16.35 percent; current share price: AU$7.88

Just below NASDAQ's allotment to tech, Asia Technology Tigers (ASX:ASIA) has tech holdings of 48.48 percent. As the name suggests, this ETF focuses its holdings in top Asian companies specifically, and are not as globally representative as other ETFs.

 Betashares Crypto Innovators ETF

Market cap: AU$102 million; year-to-date loss: 20.49 percent; current share price: AU$6.21

The Crypto Innovators ETF (ASX:CRYP) was included based on the current global interest in crypto currencies. Your feelings about this particular basket of securities might depend on your opinions about crypto currency as much as the statistics of the ETF itself. Betashares.com said, "CRYP provides focused exposure to companies involved in servicing crypto-asset markets or which have material investments in crypto-assets." It goes on to emphasize the speculative nature of crypto-assets, as well as to underline the volatility of returns.

Don’t forget to follow us @INN_Australia for real-time news updates!

Securities Disclosure: I, Ryan Sero, hold no direct investment interest in any company mentioned in this article.

Featured
Global News

Top News

Global News

×