- Digital
Infrastructure and Connectivity, which is the main focus of our technology ETF, has 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.
- The 2020 Coronavirus pandemic 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
- In a broad rally, Data Networks and Digital Services & IP names led
the index this month followed closely by Digital Processing names
- Digital Connectivity and Data Center names lagged on a relative basis
- Of the 84 names in the technology ETF portfolio, only 9 had negative returns this month
- Strengthening TWD and JPY added marginally to returns while EUR strength
was strongly additive
- Top ten names contributed to roughly 40% of index returns
- Bottom ten names detracted to -1.36% of index returns
Tematica BITA Digital Infrastructure and Connectivity Index
Performance
November
|
12 Month*
|
14.45%
|
46.99%
|
Past
performance is no guarantee of future performance.
Source: Tematica Research, BITA
*12
Month figures based on 30.11.2019 – 30.11.2020
In a reversal of last month
Advanced Micro Devices (AMD) was the largest mover this month, contributing to
8.55% of the overall return. Nvidia Corp (NVDA) also rebounded in November
contributing to 2.53% of overall return for the month. In anticipation of Black
Friday and Cyber Monday sales, Fastly Inc (FSLY) and Shopify (SHOP) had a
strong month each contributing over 3.90% to November’s result and payments
processor Square (SQ) posted a 36.21% return for the month, contributing to
6.70% of the index return.
As the U.S. presidential
election results came into focus for everyone and promising vaccine news
emerged, the markets rallied through November. In as much as a “return to
normal” seems to be top of mind, global dependence on digital infrastructure
has been reinforced over the past few months and with the holiday shopping, video
game console upgrading and virtual get-together season starting, investors
continue to place more importance on those names that make all of this activity
possible.
Past performance is no guarantee of future performance.
Source of all data Tematica Research. All data as of 30.11.20
Digital Infrastructure and
Connectivity UCITS ETF Performance
Total Return NAV to Date (up to 30/11/2020)
|
1M
|
3M
|
6M
|
YTD
|
12M
|
Since Inception*
|
Digital Infrastructure and Connectivity UCITS ETF
|
14.42%
|
-
|
-
|
6.31%
|
-
|
6.31%
|
Tematica BITA Digital Infrastructure Index
|
14.45%
|
9.57%
|
29.68%
|
38.50%
|
46.99%
|
6.56%
|
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 30/11/2020 *Fund inception: 08/10/2020
Industry News
Sony
Corp (SNE) officially launched the latest
generation of its PlayStation gaming platform, the much anticipated PS5 on
November 19th in Europe. As the Coronavirus Pandemic was unfolding
back in March, Sony engineers announced that it was limiting download speeds of
its PlayStation platforms[1] in an attempt to help ISPs manage
bandwidth, but there has not been any notice of a similar action to manage
bandwidth with this release.
Microsoft
Corp (MSFT) launched
its latest version of the Xbox gaming platform on November 10 which saw 108 petabytes
of data flowing through the networks of UK internet provider Virgin Media[2] setting a new record for the
service.
Switch (SWCH), Dell Technologies (DELL) and FedEx (FDX)
announced they will be working together to build out a series of Edge Computing
locations with Dell providing the hardware, Switch providing the connectivity
and FedEx providing the real estate to house the centers[3].
Constituent News
Ranked Segments
|
Ranked Weighted Segment Returns
|
Digital Processing
|
3.57%
|
Digital Services & IP
|
3.57%
|
Data Networks
|
3.23%
|
Digital Connectivity
|
2.14%
|
Data Centers
|
1.61%
|
Digital Transmission
|
0.51%
|
Past performance is no guarantee of future performance.
Source of all data Tematica Research. All data as of 30.11.20
Digital Infrastructure and
Connectivity UCITS ETF Performance Attribution Tables
Ticker
|
Top 10
|
Period Return
|
Contribution to Return
|
Segment
|
AMD
|
Advanced Micro Devices Inc.
|
23.07%
|
8.55%
|
Digital Processing
|
SQ
|
Square Inc.
|
36.21%
|
6.70%
|
Data Networks
|
NXPI
|
NXP Semiconductors N.V.
|
17.24%
|
4.90%
|
Digital Processing
|
FSLY
|
Fastly Inc.
|
33.48%
|
3.95%
|
Digital Services & IP
|
SHOP
|
Shopify Inc.
|
17.82%
|
3.91%
|
Digital Services & IP
|
6723:JP
|
Renesas Electronics Corporation
|
8.34%
|
2.56%
|
Digital Processing
|
NVDA
|
Nvidia Corporation
|
6.92%
|
2.53%
|
Digital Processing
|
IFX:GR
|
Infineon Techs.
|
26.86%
|
2.51%
|
Data Centers
|
QCOM
|
Qualcomm, Inc.
|
19.30%
|
2.50%
|
Digital Services & IP
|
IIVI
|
Ii-Vi Inc.
|
48.78%
|
2.50%
|
Digital Services & IP
|
Ticker
|
Bottom 10
|
Period Return
|
Contribution to Return
|
Segment
|
AMT
|
American Tower Corp
|
0.67%
|
0.04%
|
Digital Transmission
|
SWKS
|
Skyworks Solutions, Inc.
|
-0.08%
|
-0.01%
|
Digital Connectivity
|
QIWI
|
Qiwi Plc
|
-0.21%
|
-0.01%
|
Data Networks
|
SBAC
|
Sba Communications Corp
|
-1.10%
|
-0.06%
|
Digital Transmission
|
CONE
|
Cyrusone Inc.
|
-1.60%
|
-0.06%
|
Data Centers
|
QTS
|
QTS Realty Trust Inc.
|
-3.41%
|
-0.13%
|
Data Centers
|
DY
|
Dycom Industries Inc.
|
-3.20%
|
-0.21%
|
Data Networks
|
AAOI
|
Applied Optoelectronics, Inc.
|
-5.35%
|
-0.26%
|
Digital Transmission
|
EQIX
|
Equinix Inc.
|
-4.57%
|
-0.27%
|
Data Centers
|
DLR
|
Digital Realty Trust, Inc.
|
-6.62%
|
-0.39%
|
Data Centers
|
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 30/11/2020
Outlook
As
more networks transition to deploying fully-fledged standalone 5G beginning in
the 2020/2021 timeframe, the full impact of 5G on IT hardware spending will
grow to $326 billion by 2025 according to Moor Insights & Strategy. This is
not limited to corporate spending either as Qualcomm (QCOM) forecasts 175 to 225
million 5G handsets for 2020 rising to 450 to 550 million in 2021 and CCS
Insight sees 60% of all phones sold in Western Europe and North America in 2021
supporting 5G, growing to 85% in 2024.
With
new gaming platforms from both Sony and Microsoft, an entrenched work from home
mind-set not to mention a continuing 5G rollout (and initial steps toward 6G
development) 2021 is shaping up to be another year of focus on digital
infrastructure. A Deloitte Consulting LLP analysis estimates
that the United States requires between $130 and $150 billion over the next 5
to 7 years to adequately support broadband competition, rural coverage and
wireless densification
With
regards to competition, rural coverage and densification, another tailwind (or
at least viewed as positive by many) for digital infrastructure investors is
the November 30 announcement by current FCC Chairman Ajit Pai that he will be
stepping down from his post effective January 20, 2021. Mr. Pai is credited by
many as being a roadblock to the widespread development of broadband to rural
communities in the US as well as the person responsible for the death of Net
Neutrality. Some maintain that the FCC under his reign has helped reduce
competition in the space and encouraged practices like throttling and
“zero-rating” (reducing streaming speeds or charging fees for competitors’
offerings while providing one’s own offering at high quality, zero-cost
bandwidth). A return to a relatively level playing field can only increase the
velocity of the digital infrastructure virtuous cycle.
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 5G (and
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
The Digital Infrastructure 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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