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Tech Megatrend Monthly Report | November

 

  • BioNTech’s vaccine trial with Pfizer has boosted this holding to a top 10 holding in our technology ETF
  • Genomics, Social Media and Future Cars were the biggest contributors to monthly performance. 
  • With US exposure at 56.1%, Asia hit a new high of 30.0% weighting, and Europe rose to 13.0%.

 

Performance Review

HAN-GINS Tech Megatrend Equal Weight UCITS ETF (ITEK) is benefiting from the enlarged Genomics and Digital Entertainment subthemes.  Genomics remains our largest weighting at 15.13%, ahead of the next rebalance, followed by Future Cars (15.00%) and Robotics (14.62%). For 2020, our technology ETF is now up 28.68% and over the past 12 months, 40.26%.

During October, the standout subtheme performers were Social Media and Genomics, as the broader tech industry awaited the outcome of the US election and struggled to reaching new highs following impressive gains earlier in the year.

 

ITEK Monthly Report


October


12 Month*


-0.11%


40.26%

Past performance is no guarantee of future performance. Source: Bloomberg/ HANetf *12 Month figures based on 01.11.19 - 31.10.20

 

The leading performers in October continued to benefit from COVID-19 vaccine research and remote working behaviours becoming the norm.  Our Genomics sub-theme performed well, with impressive growth from Exact Sciences (up 21.5%), BioNTech (23.3%) and Corteva (14.5%).  Social Media’s impressive gains were led by Pinterest (up 42.0%), Weibo (14.1%) and Alphabet (14.5%). 

Robotics & Automation firms also feature positively in October, led by Fanuc (10.6%), Rockwell Automation (7.5%) and Xilinx (13.9%).  Riot Blockchain posted impressive gains of 21.1% for the month.[1]

The pandemic continues to boost Social Media and Genomics constituents as the search for a vaccine and personalized medicine needs continue to grow, given the US’s aging population.  ITEK contains the majority of leaders across the Fourth Industrial Revolution and shows far less volatility than the top heavy Nasdaq and MSCI Tech indices.  ITEK’s equally weighted approach ensures performance is far more diversified and globally based.

Past performance is no guarantee of future performance Source: Solactive FactSet and Bloomberg. Data as of 31/10/20

 

HAN-GINS Tech Megatrend Equal Weight ETF- Performance

Total Return NAV to Date (up to 01/11/19 – 31/10/20)

 

 

1M

3M

6M

YTD

12M

Since Inception

HAN-GINS Tech Megatrend Equal Weight UCITS ETF (Acc)

-0.11%

4.63%

31.56%

28.68%

40.26%

49.20%

Solative Innovative Technologies Index (NTR)

-0.09%

4.70%

32.02%

29.07%

40.97%

50.83%

 

 

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 31/10/20

 

Innovative Technology News

The Biden presidency, coupled with a likely Republican controlled Senate, is positive for Big Tech and the broader innovation and digital revolution theme, with a divided US government ensuring no extreme economic or tax policy.

Any tax increases will be more muted, ensuring Big Tech does not suffer when repatriating their overseas earnings. Key Big Tech implications are:

  • Most likely a new US nationwide data protection (privacy) law – similar to the EU’s GDPR.
  • A new Consumer Privacy Protection Bureau is likely.
  • Healthcare spending is set to increase, ensuring a bright future for Genomics companies.

 

With COVID-19 cases increasing across the US and Europe, remote technologies continue to be well positioned for growing rates of adoption, as permanent behavioural changes occur.

Social Media, Digital Entertainment and Cloud Computing will continue to see the mainstreaming of their offerings. The popularity of videogames on smartphones and tablets is growing at a record pace.  Free mobile gaming is exploding, with advertising offsetting the cost.  Meanwhile, Cloud leaders Amazon, Microsoft, Google, Alibaba and Nvidia have recently launched or announced cloud-gaming services.[2]

We expect a lot more venture capital and M&A deal flow in the gaming area. Other areas of digital entertainment (music and videos) are also seeing fast track growth globally.

 

For illustrative purposes only Source: Newzoo, 2020 Global Games Market Report

The global video streaming market was estimated at $42.6bn in 2019 and is expected to reach $50.1bn in 2020. This reflects an estimated compound annual growth rate of 20.4% from 2020 to 2027, reaching $184.2bn by 2027.[3]

Innovations, such as Blockchain technology and Artificial Intelligence (AI) will enhance video quality and boost market growth. AI now plays a key role in video/film editing, cinematography, voice-overs, scriptwriting and video production.

 

Fund Rebalance News

On September 9th our technology ETF was rebalanced as part of the regular twice-yearly process.  The number of holdings has risen from 86 to 104. This includes 36 new additions and 18 deletions.  All 8 subthemes are represented with holdings and are equally weighted.  This ensures each holding has an approximate 1% weighting.

Key additions include:

  • Digital Entertainment has been added as a new subtheme.  The subtheme includes our existing Virtual Reality subtheme, but is now far broader.  Given the growth of online streaming devices for movies, music and gaming, we felt it was important to capture these growing trends.  Amongst the 15 new holdings, these include Netflix, Spotify (music), plus Nintendo and Activision (leading gaming companies).   
  • The Genomics (Gene Therapy) subtheme definition has also been expanded to fully capture all the new activity occurring across the gene therapeutic and editing arenas. Consequently, eight new firms have been included – including Illumina and Agilent both global leaders (US based) in their respective genetic fields of genetic variation analysis and gene quality control/data analysis. 
  • Cloud Technology - this mirrors the Top 15 holdings held in our HAN-GINS Cloud Tech ETF.  ITEK Cloud holdings were updated in line with our Cloud ETF holdings which were rebalanced in July.  Recent additions included Twilio and Zoom Video. This subtheme now more accurately captures the full scope of Cloud activity – including cloud security companies, plus cloud communications and conferencing firms.

Each of our 8 subthemes holds a maximum of 15 holdings, with each of these holdings equally weighted.  In turn each subtheme is equally weighted in the ETF.  The 8 subthemes represented are:

1. Social Media

2. Cloud Technology

3. Genomics

4. Robotics and Automation

5. Digital Entertainment

6. Cybersecurity

7. Future Cars

8. Blockchain

 

Constituent News

Following our September rebalance, ITEK more fully represents the Digital Revolution.  Due to the global-nature of these technology megatrends, our US exposure continues to be reduced, currently representing just 56.13%, with Asia hitting a new high of 29.99% and Europe at 13.01%.  Our largest holdings are barely above 1.5%, due to the equal weighting of all 104 holdings.  This is in stark contrast to the Nasdaq 100 and other top-heavy technology benchmarks. 

Pinterest is our largest holding currently due to recent gains –with a weighting of 1.79%, followed by Exact Sciences (1.59%), NIO (1.55%) and Zoom Video and BioNTech (1.37%).  With the Pfizer-BioNTech successful vaccine trials just announced, BioNTech has jumped another 15% and is now a top 3 holding.  NIO, a Chinese electric vehicle firm, saw its stock jump over 9% in October due to impressive car deliveries; deliveries in October almost doubled year-over-year to 5,055 vehicles.[4] NIO has a home court advantage over Tesla in the massive Chinese EV market.

For October, our Top 20 contributors to performance are broadly spread across Social Media, Genomics, Future Cars, Robotics & Automation, and Digital Entertainment.  Pinterest contributed the most to ITEK’s performance (0.49%), followed by Exact Sciences (0.42%), NIO (0.24%), BioNTech (0.14%) and Weibo (0.12%).  During October, our Cybersecurity and Cloud Computing themes created the most drag on performance with a contributing loss of 1.4% and 1.01%.  This was largely due to their strong earlier runs prior to October – and some profit taking during the month.

 

Sub-them Performance- October

Contribution

Total Return (%)

% Average Weight

% Performance of category

Genomics

0.33

15.13

2.28

Digital Entertainment

-0.36

13.94

-2.86

Robotics & Automation

-0.34

14.62

-2.60

Blockchain

-0.14

1.54

-9.66

Future Cars

0.17

15.00

1.28

Cloud Computing

-1.01

13.48

-7.97

Social Media

0.45

13.52

3.90

Cyber Security

-1.4

12.78

-11.42

 

Top Performance Contributions- October

Holdings

Index Category

% Average Weight

Total Return (%)

Contribution to Return (%)

Pinterest Inc

Social Media

1.79%

42.01

0.49

Exact Sciences Corp

Genomics

1.59%

44.11

0.42

NIO Inc

Future Cars

1.55%

21.46

0.24

Zoom Video Communications Inc

Cloud Computing

1.37%

23.30

0.21

BioNTech SE

Genomics

1.35%

14.05

0.14

Weibo Corp

Social Media

1.24%

16.07

0.12

MediaTek Inc

Robotics & Automation

1.21%

10.62

0.11

Baidu Inc

Social Media

1.19%

12.37

0.10

SINA Corp/China

Social Media

1.17%

13.87

0.10

FANUC Corp

Robotics & Automation

1.16%

13.31

0.08

 

Region Breakdown

Weight

North America

56.13%

Asia

29.99%

Europe

13.01%

MENA

0.87%

Past performance is no guarantee of future performance

Source of all data: Solactive / FactSet and Bloomberg / HANetf. Data as of 31/10/20

 

Fund Details

HAN-GINS Tech Megatrend Equal Weight UCITS ETF (ITEK) is a UCITS compliant Megatrend ETF domiciled in Ireland. Our technology ETF tracks the Solactive Innovative Technologies Index (Net Total Return), an index of leading companies that are driving innovation in sectors including Robotics & Automation, Cloud Computing & Big Data, Cyber Security, Future Cars, Genomics, Social Media, Blockchain and Augmented & Virtual Reality.

The Solactive Index is managed according to a published, rules-based methodology. It is designed to measure the performance of an investable universe of publicly-traded companies that are involved in innovative and disruptive technological trends across a broad range of industries mentioned. To be included, companies must derive a majority of revenue from one of these themes.

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

INCOME

London Stock Exchange

ITEK LN

ITEK.L

IE00BDDRF700

USD

Acc

London Stock Exchange

ITEP LN

ITEP.L

IE00BDDRF700

GBP

Acc

Borsa Italiana

ITEK IM

ITEK.MI

IE00BDDRF700

EUR

Acc

XETRA

T3KE GY

T3KE.DE

IE00BDDRF700

EUR

Acc

SIX

ITEK SW

ITEK.S

IE00BDDRF700

CHF

Acc

 

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