- Record Cloud Computing earnings have been
reported globally, with Asia-Pacific showing the fastest growth.
- Gene Sequencing enjoys a rerating, becoming more
mainstream for medicine.
- Future Cars are benefiting from Biden’s
Green/Climate friendly policies.
- Our technology ETF is increasingly global – with US exposure
under 57% and Asia approaching 30%.
- Digital video streaming platforms such as
Netflix and Disney+ hit new subscriber records in the past quarter.
Performance Review
HAN-GINS Tech Megatrend Equal Weight UCITS ETF (ITEK)
impressed with a 4.2% gain in January - benefiting from fast adoption rates
across the Digital Revolution. ITEK’s
equal weighting of eight key subthemes ensures it captures many of these
gains. Our technology ETF returned 64.8% over the past
1-year period.
Tech
Megatrend ETF (ITEK) Returns
January
|
12 Month*
|
4.17%
|
64.82%
|
Past performance is no guarantee
of future performance.
Source: Bloomberg, HANetf
*12
Month figures based on 31.01.20 - 31.01.21.
For January, Blockchain was the standout subtheme gaining
13.6%, followed by Future Cars up 6.8%, Genomics 5.6%, Digital Entertainment
4.4%, Cyber Security 2.7% and Social Media 1.3%.
Due to recent monthly gains Future Cars, Digital
Entertainment and Genomics remain our largest subtheme weightings ahead of the
next index rebalance.
The Biden Administrations green energy approach is favouring
Future Cars, with likely subsidies being offered to boost demand for EV
vehicles. A huge spike in online/mobile gaming, partly funded through
advertising, has boosted its weighting.
Impressive January gains for BioNTech, Baidu, NIO, Crowdstrike,
Bilibili, Riot Blockchain attest to the breadth of the Digital Revolution and
reratings that have occurred. Asian
companies now represent almost 30% of ITEK, with the US just below 57% for the
first time.
Megatrend Sub-theme
|
Total Return (%)
|
% Average Weight
|
Performance of category
|
Genomics
|
0.79
|
14.16
|
5.58
|
Digital Entertainment
|
0.62
|
14.21
|
4.36
|
Robotics & Automation
|
0.06
|
13.38
|
0.45
|
Blockchain
|
0.75
|
5.50
|
13.64
|
Future Cars
|
1.09
|
16.03
|
6.80
|
Cloud Computing
|
0.01
|
10.73
|
0.09
|
Social Media
|
0.15
|
11.31
|
1.33
|
Cyber Security
|
0.34
|
12.47
|
2.73
|
Past performance is no guarantee of future performance. Source: Solactive, Data as of 31.01.21
HAN-GINS Tech
Megatrend Equal Weight UCITS ETF – Performance
As of 31.01.21
|
1M
|
3M
|
6M
|
YTD
|
12M
|
SI
|
HAN-GINS Tech Megatrend UCITS ETF
|
4.17%
|
29.45%
|
35.45%
|
4.17%
|
64.82%
|
93.15%
|
Solactive Cloud Technology Index (NTR)
|
4.22%
|
29.67%
|
35.77%
|
4.22%
|
65.56%
|
95.57 %
|
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 31/01/2021
Industry News
The new Biden Administration’s embrace of Green
Energy is boosting demand for Future Cars.
This is helping rerate a number of our holdings across this
subtheme. Highlights include:
- Big US & EU push to remove
petrol/gas cars by 2035
- Volvo’s EV sales already represent
one-third of total revenues and will rise to 50% by 2025[1]
-
Volkswagen, Ford and GM are
seeking to work with leading software firms including Microsoft[2]
and Google[3]
Five Reasons
Tesla is Undervalued long-term in our view:
- Tesla is far more than a carmaker-
they are increasingly robots on wheels
- While other carmakers struggle to
integrate 3rd party software, Tesla has been doing this inhouse for years
-
Tesla's self-driving car will
likely challenge ride-sharing apps Uber & Lyft in just a few years
- Battery and AI technology provides
it with a wide moat currently
- We expect production to ramp up to
5million+ vehicles annually within the next few years
Digital Entertainment continues to be a huge
beneficiary of COVID and is experiencing exponential growth.
- Gaming now 3X larger than
Hollywood movie industry and is growing faster[4]
- Online video streaming has seen
Netflix hit almost 200 million total subscribers which is a record[5]
Lastly, Cloud growth is assisting Cybersecurity
firms too. Remote work is boosting
demand for Cybersecurity services
-
Asia Pacific is the fastest growing for
both Cloud and Online Gaming[6]
- Amazon’s Cloud unit AWS now
represents ~60% of all Amazon's total profits[7]
- Cloud profit margins are amongst
the highest in IT due to the reliable, fast growing subscription model
Constituent News
ITEK’s global mix of 103 holdings, is representative of the
Digital Revolution. Our US exposure is currently just 56.7%, with Asia 29.8%
and Europe at 12.7%. Most of our Top 10
and largest holdings are between 1.2% - 2%, prior to rebalance and equal
weighting. This is in stark contrast to
the Nasdaq 100 and other technology benchmarks which are very overweight a few
Big Tech firms. Our FAANG exposure is
under 7% versus the Nasdaq 100 at approximately 40%.
Our top performing contributors are listed below for January
by subtheme and holdings. Clearly
holdings in Future Cars, Genomics, Cybersecurity and Digital Entertainment had
the largest number of top contributors, although Riot Blockchain again led the
pack with a 20.8% return. Genomics
players BioNTech, Guardant Health and Beigene gained 43.5%, 20.7% and 21.1%
respectively.
Other star performers in January included Bilibili the
Chinese gaming firm (up 32.9%), Fastly (up 25.2% Cybersecurity), Nio 17.0% the
Chinese EV car maker and Roku the US digital entertainment firm (17.2%).
As the demand for digital ledgers and currencies grow during
COVID, we expect further Blockchain firms to join ITEK’s holdings at our next
rebalance.
Past performance is no guarantee of future performance.
Source: Solactive. Data as of 31.01.21
Top Contributors – January 2021
Holdings
|
Index Category
|
% Average Weight
|
Total Return (%)
|
Contribution to Return (%)
|
RIOT BLOCKCHAIN INC
|
Blockchain
|
4.52
|
20.78
|
0.74
|
BILIBILI INC ADR
|
Digital Entertainment
|
1.76
|
32.86
|
0.43
|
BIONTECH SE-ADR
|
Genomics
|
1.17
|
43.45
|
0.43
|
NIO INC - ADR
|
Future Cars
|
2.16
|
16.95
|
0.31
|
ROKU INC
|
Digital Entertainment
|
1.63
|
17.17
|
0.24
|
GUARDANT HEALTH INC
|
Genomics
|
1.12
|
20.65
|
0.20
|
MEDIATEK INC
|
Robotics & Automation
|
1.15
|
17.46
|
0.19
|
SANGFOR TECHNOLOGIES
|
Cyber Security
|
0.97
|
21.68
|
0.19
|
FORD MOTOR CO
|
Future Cars
|
1.05
|
19.8
|
0.18
|
FASTLY INC - CLASS A
|
Cyber Security
|
0.73
|
25.16
|
0.17
|
BEIGENE LTD
|
Genomics
|
0.93
|
21.08
|
0.16
|
SAMSUNG SDI CO LTD
|
Future Cars
|
1.25
|
13.53
|
0.15
|
HYUNDAI MOTOR CO
|
Future Cars
|
1.05
|
15.85
|
0.14
|
NETEASE INC
|
Digital Entertainment
|
0.78
|
20.73
|
0.14
|
TESLA INC
|
Future Cars
|
1.18
|
12.45
|
0.12
|
BAIDU INC - SPON ADR
|
Social Media
|
1.57
|
8.68
|
0.11
|
Past performance is on guarantee of
future performance. Source: Solactive. Data as of 31.01.21
Outlook
We believe the latest wave of COVID-19 ensures that remote
technology trends are now mainstream and unlikely to be replaced post vaccines. Workers behaviours appear changed for good, with
many committing to only return to office-based settings for part of the week.
Cloud Computing spending will continue to boom as corporate
IT departments continue to reduce their hardware footprint. Cybersecurity is repeatedly
feeding off this remote trend and more cloud firms are entering the security
space seeking to offer a one-stop solution.
These areas are more closely bound than ever before and should track each
other’s continued growth.
Cloud growth outside the US will continue to exceed IUS
growth, especially across Asia and likely Africa too.
Social Media and Digital Entertainment are scaling up
globally too. Gaming had its most
profitable year ever in 2020 with half the industry’s revenue coming from Asia. Online gaming now represents a majority of
Gaming revenue and we expect Amazon and other Big Tech firms to try to grow
this area.
Big Tech is also likely to become more focused on Healthcare
across Telemedicine, Gene Editing, Wearables/Trackers and Hospital administration
which has seen an explosion in cloud usage.
We expect significantly more M&A corporate activity in
the cybersecurity and healthtech areas.
In the future cars space, Tesla is planning to aggressively
launch its EV Truck solution. While Apple
has agreed to work with Hyundai on a likely Apple Car. Autonomous cars will significantly disrupt
the taxi and ride-sharing industries in future years.
Product Details
HAN-GINS Tech Megatrend Equal Weight UCITS ETF (ITEK) is a
UCITS compliant technology ETF domiciled in Ireland. ITEK 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.
Please remember that the value of your investment may go
down as well as up and past performance is no indication of future performance.
Visit the ITEK Fund Page for
more information.
