If you’re looking for tech exposure, the BetaShares S&P/ASX Australian Technology ETF (ASX: ATEC) is a popular way to get broad-based access to technology shares on the ASX.
An exchange-traded fund (ETF) basically lets you invest in a whole bunch of different businesses with a single investment.
It’s very handy if you want to get good diversification, but you don’t want to buy 50, or 100 or 1,000 businesses yourself. In fact, I’d say buying 1,000 different companies yourself would be a very poor choice for all the brokerage costs alone.
If you’re interested in learning about ETFs, check out Rask’s free beginner ETF course.
Getting to know the ATEC ETF
The ATEC ETF is all about giving Aussies exposure to the technology sector on the ASX. More specifically, it aims to track the performance of the S&P/ASX All Technology Index (before fees).
You don’t have to decide which ASX tech shares to invest in – with this ETF, you get a market-weighted exposure to various sub-sectors such as information technology, consumer electronics, online retail and medical technology.
If you’re familiar with the ASX term ‘WAAAX’ – kind of like FAANG – then you may like to know that all of those WAAAX businesses are represented in the top 10 holdings in the ETF.
Those biggest 10 positions inside ATEC are: Afterpay Ltd (ASX: APT), Xero Limited (ASX: XRO), SEEK Limited (ASX: SEK), REA Group Limited (ASX: REA), Computershare Ltd (ASX: CPU), NextDC Ltd (ASX: NXT), Carsales.com Ltd (ASX: CAR), WiseTech Global Ltd (ASX: WTC), Altium Limited (ASX: ALU) and Appen Ltd (ASX: APX).
However, Afterpay is over a quarter of the portfolio with a 25.7% weighting and the Xero weighting is the only other one above 10%, with an 11% weighting.
The BetaShares S&P/ASX Australian Technology ETF has an annual management fee of 0.48%.
Is ATEC a good way to get exposure to ASX tech shares?
If you’re focused on industry exposure, then it’s obviously a good way to get technology exposure.
Whilst I like that you get exposure to around 70 holdings, including smaller ones like Damstra Holdings Ltd (ASX: DTC), Whispir Ltd (ASX: WSP) and Frontier Digital Ventures Ltd (ASX: FDV), you are getting a very large amount of Afterpay exposure.
Therefore, I wouldn’t want to buy ATEC right now because of how expensive Afterpay shares are. But it could be one to think about in the future if you want ASX tech share exposure.
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