1 key reason to buy the ATEC ETF (and 1 not to)

BetaShares S&P/ASX Australian Technology ETF (ASX: ATEC) has been high-performing ETF since 23 March 2020. There’s one key reason to buy it.

About ATEC

ATEC provides exposure to leading ASX businesses in a range of tech-related market segments like IT, consumer electronics, online retail and medical technology.

What are some of the names that it’s invested in? Its biggest holdings, in order, are: Afterpay Ltd (ASX: APT), Xero Limited (ASX: XRO), SEEK Limited (ASX: SEK), Computershare Limited (ASX: CPU), REA Group Limited (ASX: REA), Nextdc Ltd (ASX: NXT), Carsales.Com Ltd (ASX: CAR), WiseTech Global Ltd (ASX: WTC), Altium Limited (ASX: ALU) and Appen Ltd (ASX: APX).

But ATEC also owns gives a (very small) exposure to names like RPMGlobal Holdings Ltd (ASX: RUL), ELMO Software Ltd (ASX: ELO), Volpara Health Technologies Ltd (ASX: VHT) and Audinate Group Ltd (ASX: AD8).

it has an annual management fee of 0.48% per year.

Other similar ETFs

The ETF is fairly unique on the ASX, though there other ETFs that focus on international technology businesses like ETF Securities TECH ETF (ASX: TECH), BetaShares NASDAQ 100 ETF (ASX: NDQ) or BetaShares Global Robotics and Artificial Intelligence ETF (ASX: RBTZ).

How has the ETF performed?

Source: Best ETFs ATEC 1-year share price chart.

It was launched during the COVID-19 crash, but it has rebounded strongly since then, its up 93% from 23 March 2020. Since inception it has returned 40.1%. Over the past three months the ETF has returned 23.7%.

1 key reason to buy it

Many of the businesses that ATEC is invested in are great ASX growth shares with higher profit margins. There’s a reason why the ETF has performed so well – because many of its holdings are performing well in this new COVID-19 world. Returns won’t always be this strong, but it could keep outperforming.

However, the biggest five positions make up almost half of the portfolio, Afterpay is 18% of the whole ETF. That’s not great diversification, though if it delivers the returns does it really matter?

But there are plenty of other ETFs out there for growth and/or dividends. Check out our list of ASX ETFs.

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Disclaimer: Any information contained in this article is limited to general financial advice/information only. The information should not be relied upon because it has not taken into account your specific needs, goals or objectives. Please, consult a licenced and trusted financial adviser before acting on the information. Past performance is no guarantee of future performance. Nothing in this article should be considered a guarantee. Investing is risky and can result in capital loss. This article is authorised by Owen Raszkiewicz of The Rask Group Pty Ltd. Please read our Terms and Conditions and Financial Services Guide before using this website. The Rask Group Pty Ltd is a Corporate Authorised Representative (#1280930) of AFSL #383169.

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