The ASX tech ETF you can buy and hold forever
Image source: Getty ImagesIt’s hard to pick a tech share and get it right. Multitudes already exist withnew ones coming on the market regularly. Buying single tech shares meansputting your faith in that company to outperform in an extremely competitiveindustry, however, sitting on the sidelines means watching tech companiesbecome so expensive it’s hard to get a foot in the door.To further complicate things, not only is it a question of which company toinvest in, but which country. With the US markets producing some of theworld’s most well-known tech companies, it seems like an easy choice to lookoverseas for returns.However, as an Aussie investor, this is easier said than done, particularly ifyou are trying to invest in multiple countries or gain access to multipleexchanges. But putting tech in the ‘too hard’ basket can mean missing out onstaggering returns overseas.In my view, the solution lies in a global tech exchange-traded fund (ETF):
Morningstar Global Technology ETF (ASX: TECH)
With a ticker like ‘TECH’, this one should be easy to remember. In my opinion,Morningstar have done a great job putting this fund together and I really likethe global exposure. Although there are alternative tech ETFs on offer, thisone is top of my list.
At the time of writing, the fund’s global allocation is: USA (74.1%), Germany(7.1%), Switzerland (6.2%), Israel (4.1%), Japan (3.8%), Hong Kong (2.4%) andFrance (2.2%) approx. This is a great spread and really provides that globalexposure investors need for the tech industry.
Top 10 holdings
At the time of writing, TECH’s top 10 holdings include: Infineon Technologies(5.0%), Splunk Inc (4.4%), STMicroelectronics (4.4%), Microchip Technology Inc(4.3%), Nice Ltd (4.2%), Broadcom Inc (4.1%), Microsoft Corp (4.0%),Servicenow Inc (4.0%), Zendesk Inc (3.9%) and Guidewire Software (3.9%).
Trading and investing
Buying and selling ETFs is done in the same way as regular shares, directlythrough your chosen broker. Simply search for the ETF using the ticker above.
The returns that tech shares can provide are staggering at times. With ourworld evolving and becoming more digital in nature by the day, I feel thattech shares should form a part of all portfolios, however, choosing the rightones can be both daunting and expensive.Investing through ASX ETFs such as TECH means exposure to global tech players.Over multi-year periods, compounded returns in tech ETFs can be hard to beat –and you never know, your ETF might just catch the next Amazon!3 ASX tech shares to buy in AprilImage source: Getty ImageIn early March, analysts at Macquarie Group Ltd (ASX: MQG) made a statement,believing “investors will be drawn back to Tech” following the bear marketcreated by COVID-19.This was based on COVID-19, despite being worse than SARS, following a similarplaybook with technology companies leading the SARS market rebound.With that in mind, below are three ASX tech shares to consider buying in Aprilin anticipation of the recovery.The Audinate share price has been crushed since the beginning of the bearmarket. At one point, it was down to just $2.51 per share, a staggering 70%below its February highs. Since then, Audinate has followed the market backhigher to sit at $4.12 at the time of writing. However, this is still morethan 50% lower than its February highs of $8.50 a share.
ETFS Morningstar Global Technology ETF (ASX: TECH)
If you believe a particular sector will rebound strongly but are unsure whichcompany to invest in, an ETF can provide great diversification across anindustry.An investment in the ETFS Morningstar Global Technology ETF provides investorswith global exposure to the technology sector. Companies within this ETF arechosen based on Morningstar’s MOAT methodology. This method selects companiesthat are market leaders with distinct competitive advantages. The TECH ETF islargely invested in US tech shares, with smaller investments in Japan,Germany, Switzerland, Israel and France as of April 1, 2020.5 ETFs for technology investorsTechnology is a hugely popular investment trend. That’s hardly surprising –it’s everywhere (you’re reading this very article using technology).So, here we take a look at 5 ETFs leveraged to the technology trend.
The technology landscape
Technology companies generally either supply software or hardware, or servicesrelated to them. Hardware is physical, things like your computer, phone orother device. Software is code installed on the hardware to run programs orapps.Technology companies operate in a broad range of new and existing sectors. Thetechnology industry is vast, encompassing everything from device manufactureto augmented reality. Things that weren’t previously within the technologyspace are becoming so as the internet of things becomes a reality.By one estimate, “the digital economy is worth $11.5 trillion globally,equivalent to 15.5 percent of global GDP, and has grown two and a half timesfaster than global GDP over the last 15 years.”Technological advancement seems to occur at an exponential rate thanks toMoore’s law, which states that computers and the information technologies thatuse them double their capabilities every 12–18 months.Cybersecurity is becoming an increasing concern as more data is available inmore places. Large organisations are gathering increasing amounts of personalinformation about their customers in order to gain consumer insights. At thesame time, initiatives like Open Banking are attempting to give customers somecontrol over how their data is used.Increased regulation around data security and usage necessitates increasedresourcing of data protection and management. As the source of data,businesses become prime targets for cyber-attacks. The global cybersecuritymarket is forecast to grow to US$248 billion by 2023.
Technology and ETFs
Exchange traded funds (ETFs) providing sector specific access to technologyshares are available to trade on the ASX. ETFs are traded just like ordinaryshares. ETFs, however, provide exposure to a basket of underlying securities.Holding multiple securities means ETFs come with a measure of inbuiltdiversification. Diversification lowers unsystematic risk, reducing thevolatility of portfolio returns.Sector specific ETFs, such as technology ETFs hold a range of shares withinthe technology sector. They are diversified within the sector, but not outsidethe sector.Here are 5 ETFs designed specifically for technology investors.
ETFS Morningstar Global Technology ETF (ASX: TECH) offers focused exposure tothe global technology sector. The ETF tracks the Morningstar Developed MarketsTechnology Moat Focused Index which is composed of equally weighted marketleaders that have a competitive advantage over others in the same field.Returns were 26.45% in the year to 31 October. Management fees are 0.45% perannum and distributions are made twice yearly. Holdings are distributed acrossthe United States (89.6%), Australia (5.8%), Japan (2.4%), and Germany (2.2%).Top holdings include Arrow Electronics (4.17%), Alphabet Class A (4.13%), PaloAlto Networks (4.12%), Guidewire Software (4.10%), Microsoft (4.06%),Microchip Technology (3.98%), Broadcom (3.94%), Sabre Corp (3.93%), FacebookClass A (3.88%), and Salesforce.com (3.83%).
The Betashares Asia Technology Tigers ETF (ASX: ASIA) provides exposure to 50of the most innovative and disruptive technology companies in Asia. This canbe used to complement existing US based technology allocations. The ETF tracksthe Solactive Asia Ex-Japan Technology & Internet Tigers Index.Returns in the year to 31 October were 21.07%. Management costs are 0.67% perannum and distributions are made annually. Holdings were distributed acrossChina (45.7%), Taiwan (23.5%), South Korea (20.9%), India (8.0%), Thailand(1.0%), and elsewhere (0.9%).Top holdings included Alibaba (11%), Taiwan Semiconductor Manufacturing(9.9%), Tencent Holdings (9.5%), Samsung Electronics (9.5%), Meituan Dianping(7.0%), Infosys (4.9%), Netease Inc (4.6%), SK Hynix Inc (4.5%) and JD.com(4.3%).
Robotics and AI
The ETF Securities Global Robotics and Automation ETF (ASX: ROBO) tracks theROBO Global Robotics and Automation Index. The Index is made up of shares incompanies in the global value chain of robotics, automation, and artificialintelligence.Returns were 23.74% in the year to 31 October. Management fees are 0.69% perannum and distributions are made annually. Holdings are distributed across theUnited States (44.2%), Japan (22.4%), Germany (9.1%), Taiwan (5.7%),Switzerland (3.4%), United Kingdom (3.3%), China (2.3%), Sweden (2.1%), France(2.0%), South Korea (1.7%) and elsewhere.Top holdings include Brooks Automation (1.84%), Zebra Technologies (1.75%),Krones AG (1.71%), Nvidia Corp (1.68%), Koh Young Technology (1.67%), FanucCorp (1.66%), Intuitive Surgical (1.63%), Congnex Corp (1.63%) and Daifuku CoLtd (1.62%).
These ETFs provide instant access to a variety of global technology firms.Whether you are looking to increase you technology exposure or just diversifyyour portfolio, these ETFs will help you ride the tech train.