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Digital Infrastructure Monthly Report | November

 

  • Digital Infrastructure and Connectivity have become increasingly infused into commercial and consumer experiences worldwide from music, movies and video games to education to increased acceptance of remote work and virtual meetings; these themes can be seen in our Technology ETF DIGI  
  • The 2020 Coronavirus pandemic has greatly accelerated the global economy’s embrace of technology, especially education, remote work, communication and data processing. 
  • 5G represents an upgrade cycle in this sector; it is at currently the fifth such opportunity for infrastructure and connectivity focused companies.
  • As digital infrastructure improves, the increased capacity spurs both increased use and innovative development of data intensive platforms that push the limits of the newly improved network.

 

Performance Review

  • Digital Connectivity and Digital Processing names led the index our Technology ETF follows this month
  • Data Networks and Digital Transmission names dragged on performance
  • Digital Services & IP names took the biggest hits this month
  • Strengthening TWD and JPY added to returns while EUR weakness dragged slightly

 

Tematica BITA Digital Infrastructure and Connectivity Index Performance

October

12 Month*


-1.77%


33.02%

Past performance is no guarantee of future performance.

Source: Tematica Research, BITA *12 Month figures based on 31.10.2019 – 31.10.2020

 

Interestingly, names in the Digital Processing segment impacted October returns, both positively and negatively, with the three largest detractors to returns being Nvidia Corp (NVDA: -7.36%), Advanced Micro Devices (ADM: -8.17%) and Intel Corp (INTC: -14.48%). Offsetting these impacts were other Digital Processing names including Renesas Electronics Corp (JP:6723: 13.45%), Mediatek Inc (TT:2454: 12.97%) and NXP Semiconductor NV (NXPI: 8.26%).

From the Digital Services segment, Fastly was the worst performing name in the index this month, losing approximately 25% the day after announcing it would not meet third quarter guidance. The company continued to drift lower over the remainder of the month, with the company stating that reduced business from Tik Tok owner ByteDance presented a headwind to achieving expectations. Shopify was another name that traded off during October, albeit more towards the end of the month when, despite having a strong quarter, investors saw a profit taking opportunity on statements from management that the explosive growth experienced in the past few quarters might not materialize in future quarters as the initial rush to digitise storefronts subsides.

Past performance is no guarantee of future performance. Source of all data Tematica Research. All data as of 31.10.20

 

Digital Infrastructure and Connectivity UCITS ETF Performance

Total Return NAV to Date (up to 31/10/2020)

 

 

1M

3M

6M

YTD

12M

Since Inception

Digital Infrastructure and Connectivity UCITS ETF

-7.09%

-

-

-7.09%

-

-7.09%

Tematica BITA Digital Infrastructure Index

-6.90%

-1.88%

22.45%

21.01%

33.02%

-6.90%

 

Performance before inception is based on back tested data. Back testing is the process of evaluating an investment strategy by applying it to historical data to simulate what the performance of such strategy would have been. Back tested data does not represent actual performance and should not be interpreted as an indication of actual or future performance. Past performance for the index is in USD. Past performance is not an indicator for future results and should not be the sole factor of consideration when selecting a product. Investors should read the prospectus of the Issuer (“Prospectus”) before investing and should refer to the section of the Prospectus entitled ‘Risk Factors’ for further details of risks associated with an investment in this product. Source: Bloomberg / HANetf. Data as of 31/10/2020

 

Industry News

Qualcomm (QCOM) Long-time communication chip maker looks to move upstream in digital infrastructure push. Qualcomm Inc. announced it will produce chips for 5G telecommunications networking gear, marking the first entry by a major American technology company into a market dominated by European and Chinese firms.[1]

Canalys According to Canalys data, cloud infrastructure services spending grew 33% year-on-year in the September quarter to $36.5 billion, a $2 billion QoQ increase.[2] Per Canalys, “The return of stricter lockdown measures in certain regions over the coming months means cloud will remain vital for sustaining business operations, remote working and learning, as well as customer engagement.”[3]

Edge Computing World The industry group held its 2020 global conference (virtually, of course) on October 12th – 15th with developer and executive channels covering a wide range of topics including Auto, Retail, Industrial, Telco, Application Management and Artificial Intelligence.[4]

 

Constituent News

Ranked Segments

Ranked Weighted Segment Returns

Digital Connectivity

0.44%

Digital Processing

0.26%

Data Centers

-0.06%

Data Networks

-0.30%

Digital Transmission

-0.64%

Digital Services & IP

-1.50%

Past performance is no guarantee of future performance. Source of all data Tematica Research. All data as of 31.10.20

 

 

Digital Infrastructure and Connectivity UCITS ETF Performance Attribution Tables

Ticker

Top 10

Period Return

Contribution to Return

Segment

6723:JP

Renesas Electronics Corporation

13.42%

-33.58%

Digital Processing

2454:TT

Mediatek Inc.

13.02

-32.42%

Digital Processing

NXPI

NXP Semiconductors Nv

8.26%

-19.13%

Digital Processing

CALX

Calix Inc.

31.66%

-16.44%

Data Networks

IPHI

Inphi Corp.

24.51%

-14.01%

Digital Connectivity

DY

Dycom Industries Inc.

22.95%

-12.05%

Data Networks

PWR

Quanta Inc.

18.10%

-10.23%

Data Networks

XLNX

Xilinx Inc.

13.86%

-9.71%

Digital Connectivity

MXL

Maxlinear Inc.

13.77%

-8.69%

Digital Connectivity

QCOM

Qualcomm Inc.

4.83%

-8.69%

Digital Services & IP

 

 

Ticker

Bottom 10

Period Return

Contribution to Return

Segment

CTXS

Citrix Systems Inc.

-17.75%

7.33%

Digital Transmission

QIWI

Qiwi Plc

-15.91%

7.35%

Data Networks

INSG

Inseego Corp.

-15.70%

7.56%

Digital Services & IP

UNIT

Uniti Group Inc.

-16.28%

7.61%

Data Networks

6702:JP

Fujitsu Ltd

-14.09%

8.25%

Digital Services & IP

AAOI

Applied Optoelectronics Inc.

-21.96%

8.71%

Digital Transmission

SHOP

Shopify Inc.

-9.53%

17.02%

Digital Services & IP

NVDA

Nvidia Corporation

-7.36%

21.97%

Digital Processing

AMD

Advanced Micro Devices Inc.

-8.17%

24.67%

Digital Processing

INTC

Intel Corp

-14.48%

24.90%

Digital Processing

Attribution analysis is calculated by comparing the weighted period price return of a security to the net of taxes total return index results and as such represents an approximation of the impact a name or group of names has had on the overall index returns for the period. Past performance for the index is in USD. Past performance is not an indicator for future results and should not be the sole factor of consideration when selecting a product. Investors should read the prospectus of the Issuer (“Prospectus”) before investing and should refer to the section of the Prospectus entitled ‘Risk Factors’ for further details of risks associated with an investment in this product. Source: Tematica Research. Data as of 31/10/2020

 

Outlook

The increasing global dependence on the internet coupled with the virtuous circle of increased storage and processing capacity leading to more use and innovative application development is an ongoing process. With upgrade cycles like the one we are seeing with 5G (and will again with 6G in the next decade) present both a short- and long-term opportunity for those companies that provide goods and services to the various segments in the digital infrastructure and connectivity space.

 

Fund Details

DigitalInfrastructure and Connectivity UCITS ETF, is a UCITS compliant digital infrastructure ETF domiciled in Ireland.  

Our Technology ETF captures the companies that enable the digital applications of today and those that will redefine how people work, live and play tomorrow.  It provides exposure to the explosive growth of the digital infrastructure virtuous cycle of expanding data, applications, and bandwidth that drives exponential network growth and development of new technologies.   

Please remember that the value of your investment may go down as well as up and past performance is no indication of future performance.

EXCHANGE BB CODE RIC ISIN CURRENCY TER

London Stock Exchange

DIGI LN

HADIGI.L

IE00BL643144

USD

0.69%

London Stock Exchange

PIGI LN

PIGI.L

IE00BL643144

GBP

0.69%

Borsa Italiana

DIGI IM

DIGIT.MI

IE00BL643144

EUR

0.69%

XETRA

DIGI GY

DIGI.DE

IE00BL643144

EUR

0.69%

 

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