Could the BetaShares S&P/ASX Australian Technology ETF (ASX: ATEC) be counted as an exciting growth opportunity investors?
It’s certainly technology-focused, hence the name. This portfolio of shares looks to provide investors with exposure to various tech sectors on the ASX like IT, consumer electronics, online retail and medical technology.
What are the ASX tech shares in the portfolio?
This exchange-traded fund (ETF) is currently invested in around 80 names.
There are only ten names that have a market position of more than 2%, so it’s fairly concentrated at the top. Those businesses are: Afterpay Ltd (ASX: APT), Xero Limited (ASX: XRO), SEEK Limited (ASX: SEK), Computershare Limited (ASX: CPU), WiseTech Global Ltd (ASX: WTC), REA Group Limited (ASX: REA), Carsales.com Ltd (ASX: CAR), Nextdc Ltd (ASX: NXT), Altium Limited (ASX: ALU) and TechnologyOne Ltd (ASX: TNE).
In actual fact, Afterpay and Xero alone make up around a third of the portfolio. The biggest five positions make up more than half of the portfolio. If the businesses are good, then you want a high level of exposure to the best tech shares. But concentration can lead to volatility to say the least.
There is a total of 80 positions in the portfolio, but the smaller holdings are essentially immaterial to the return contribution of the ETF.
What is the cost of the ATEC ETF?
The annual management fee is 0.48%. That’s quite a bit cheaper than an active fund manager. However, some investors may not be comfortable with the automated level of exposure to the shares in the portfolio.
Is the ATEC ETF a good one to consider?
If investors are after tech names, then this ETF clearly delivers on providing that exposure.
The ETF was started in March 2020, during the COVID-19 crash. It has since recovered strongly. Over the past year alone, the ATEC ETF has produced a net return of around 30%.
However, if investors are taking a somewhat active approach by trying to tactically get exposure to a certain sector or group of shares, it’s worth considering if now is the right time to consider that investment. Interest rates are seemingly going to rise in the coming years and this could have a very material impact on high-growth names like Afterpay, Xero, WiseTech and so on when they have such high valuations today, with a lot of growth priced in.
But I am a big fan of technology names, which I often cover on Rask Media. There are other, more specific industries in the tech space that I like the look of such as video gaming and cybersecurity.
