The ASX 200 (ASX: XJO) has been soaring recently. Is it time to buy BetaShares S&P/ASX Australian Technology ETF (ASX: ATEC)?
What is the ETF about?
The job of the BetaShares S&P/ASX Australian Technology ETF is to provide exposure to leading ASX-listed companies in a range of technology related market segments such as information technology, consumer electronics, online retail and medical technology.
What shares is BetaShares S&P/ASX Australian Technology ETF invested in
It’s invested in close to 50 ASX technology shares. Some of its biggest holdings include Afterpay (ASX: APT), Xero (ASX: XRO), REA Group (ASX: REA), Altium (ASX: ALU), Carsales (ASX: CAR), Nextdc (ASX: NXT), WiseTech Global (ASX: WTC) and Appen (ASX: APX).
Why you’d want to consider investing in this ETF
As a group, technology shares have performed very well over the past five years. Tech shares usually have much higher gross profit margins and are able to expand quicker than normal businesses. I think they have better growth potential than banks and miners, that’s for sure.
To make good investor returns we need to be invested in those businesses that can deliver the best profit growth over the years. Share prices will follow earnings over time.
There are plenty of technology shares that could become future ASX blue chips within the BetaShares S&P/ASX Australian Technology ETF like Megaport (ASX: MP1), Webjet (ASX: WEB), Pro Medicus (ASX: PME), Kogan.com (ASX: KGN) and Pushpay (ASX: PPH).
In a low interest environment it’s the businesses generating good growth that will capture the interest of the market the most. As more technology businesses are listed on the ASX, this ETF will have more holdings and provide more diversification.
Another benefit to BetaShares S&P/ASX Australian Technology ETF is its fees. If you were invested with a fund manager who largely targeted ASX tech shares you’d probably pay an annual 1% (or more) management fee whilst also paying outperformance fees when applicable. This ETF only charges 0.48% per annum. Much cheaper than those managers, which could be an important aspect of maximising net returns.
Is it a good time to buy?
BetaShares S&P/ASX Australian Technology ETF is made up of a lot of different shares. Not many people are going to make an individual judgement about whether each business is good value.
Technology shares can be much more volatile and have performed strongly recently after the COVID-19 crash. I wouldn’t invest a huge amount today, but I wouldn’t mind buying a ‘parcel’ today and buying more on market dips.