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Tech Megatrend Market Report | March

 

  • Cloud Computing powering online gaming growth with record 2.7bn active gamers globally[1]
  • In 2020 50m more Americans played games (11m typical year)[2]
  • Grandview Research predicts cloud-based gaming CAGR of 48.2%                          
  • Blockchain’s size is expected to grow from $3bn in 2020 to $39.7bn by 2025, a CAGR of 67.3%[3]                         
  • Blockchain remains ITEK’s top performer followed by Social Media and Digital Entertainment.                         
  • Biden’s Stimulus plan is set to boost spending on Future Cars and Genomics[4],[5]                         
  • Huge cyberattack on US Government, leading to big public spending on cybersecurity ($200bn in 2024)[6]

     

Tech Megatrend ETF (ITEK) Returns

January

12 Month*

6.42%

84.95%

 

Past performance is no guarantee of future performance. Source: Bloomberg, Solactive, HANetf *12 Month figures based on 29.02.20 - 28.02.21. as fund performance.

 

Performance Review

HAN-GINS Technology ETF (ITEK) impressed with a 6.4% gain in February as it benefited from fast adoption rates across the Digital Revolution.  ITEK’s equal weighting across eight key subthemes ensures it captures much of these gains.  ITEK returned 85.0% over the past one-year period. 

For February, Blockchain was the standout subtheme, gaining 55.9%, followed by Social Media 13.7% and Digital Entertainment 4.8%.

Due to recent monthly gains, Future Cars (15.2%), Digital Entertainment (14.1%), Genomics (13.5%), Robotics-AI (12.3) and Social Media (11.9%) remain our largest subtheme weightings ahead of the next index rebalance in March.

Future Cars continue to benefit from the Biden Administration’s new green energy approach - with price subsidies likely to be offered, boosting demand for EV vehicles. Cloud is boosting online gaming and social media.[7]

Impressive February gains for a large number of Social Media players (Twitter, Baidu, Pinterest), Digital Entertainment (Evolution Gaming, Bilibili) and Future Cars (Aptiv, Ford, NXP Semiconductors) also boosted performance.  Robotics standout was Microchip Tech up 12.4% for the month; while Fortinet up 16.7% was our Cybersecurity standout.  With Asian companies now representing almost 30% of ITEK, US influence is below 60% and ITEK is increasingly global.

Past performance is no guarantee of future performance. Source of all data: Solactive. Data as of 28.02.2021

Megatrend Sub-theme

Total Return (%)

% Average Weight

Performance of category

Genomics

-0.33

13.47

-2.45

Digital Entertainment

0.67

14.11

4.75

Robotics & Automation

0.01

12.30

0.08

Blockchain

5.04

9.02

55.88

Future Cars

0.15

15.20

0.99

Cloud Computing

-0.03

10.30

-0.29

Social Media

1.62

11.87

13.65

Cyber Security

-0.43

11.71

-3.67

Past performance is no guarantee of future performance. Source of all data: Solactive. Data as of 28.02.2021

 

HAN-GINS Tech Megatrend Equal Weight UCITS ETF

Performance As of 28.02.21

 

1M

3M

6M

YTD

12M

SI

HAN-GINS Tech Megatrend UCITS ETF

6.42%

19.32%

36.22%

10.86%

84.95%

105.56%

Solactive Innovative Technologies Index (NTR)

6.33%

19.34%

36.44%

10.82%

85.65%

107.95%

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 28/2/2021

 

Industry News

The Biden Administration’s embrace of Green Energy and Cybersecurity is helping to positively rerate ITEK’s holdings across Future Cars, Cloud Security and pure Cybersecurity firms. 

Cloud spending is far outpacing traditional non-Cloud IT spending.[8]

Asia continues to be the fastest growing area for Cloud adoption rates and Digital Entertainment.[9]

Some of the biggest changes in the cloud space include a more decentralised Cloud known as Hybrid or multi-Cloud, which is being powered by the likes of IBM, and the increase healthcare spending on Cloud, which remains amongst the fastest growing areas.

While Tesla saw a recent selloff, we continue to be positive on the holding as it dominates EV sales in the US.  Its Chinese factories are scaling up to new production heights too.  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.

Big Cloud players such as Amazon and Microsoft are spending big in the online gaming market with Microsoft just purchasing Bethesda Games for over $7.5bn.[10]  Gaming is approaching four-times the size of the Hollywood movie industry - and is growing far faster![11]

Movie/video streaming has seen Netflix hit 200 million total subscribers – with Disney+ expected to exceed 120 million subscribers shortly.[12]

Remote work is boosting demand for Cybersecurity services as Amazon’s Cloud unit AWS now represents almost 60% of all Amazon's total profits.  The Cloud subscription model ensures its profit margins are amongst the highest in IT.[13]

 

Constituent News

Our technology ETF's global mix of 115 holdings is representative of the Digital Revolution. Our US exposure is currently 59.0%, with Asia 27.8% and Europe at 12.6%.  Most of our Top 10 and largest holdings are between 1.2% - 1.8%, prior to rebalance and equal weighting.  Due to Blockchain’s significant rerating, our Riot Blockchain holding gained 157.5% so far in 2021 and represents an 8.9% weighting.  Unlike the Nasdaq 100 and other technology benchmarks which are very overweight a few Big Tech firms, ITEK.  Our FAANG exposure is under 7% currently versus the Nasdaq 100 at approximately 40%. 

Our top performing contributors are listed below for February – by subtheme and holdings.  While Blockchain clearly outperformed (Northern data up 29.3% and Riot above 100%), Social Media, Future Cars, Genomics and Digital Entertainment had the largest number of top contributors.  Social Media players showed impressive gains with Twitter (up 52.5%), Baidu (20.6%), Pinterest (17.6%), Weibo (21.0%) and Alphabet (10.7%).

Other star performers in February included Digital Entertainment firms Evolution Gaming (up 27.90%), Bilibili the Chinese gaming firm (10.61%) and Sea Ltd (8.8%).  Future Cars were led by Aptiv PLC (up 12.2%), NXP Semiconductors (13.8%) and Ford (11.1%).

As the demand for digital ledgers and currencies grow during COVID, we expect a number of Blockchain firms to join ITEK’s holdings at our next rebalance. 

Past performance is no guarantee of future performance. Source of all data: Solactive. Data as of 28.02.2021  

 

Top Contributors – February 2021

Holdings

Index Category

% Average Weight

Total Return (%)

Contribution to Return (%)

RIOT BLOCKCHAIN INC

Blockchain

7.88

113.16

4.80

TWITTER INC

Social Media

1.21

52.50

0.52

BAIDU INC - SPON ADR

Social Media

1.78

20.61

0.32

PINTEREST INC- CLASS A

Social Media

1.67

17.62

0.29

NORTHERN DATA AG

Blockchain

1.14

29.34

0.24

EVOLUTION GAMING

Digital Entertainment

1.04

27.90

0.24

BILIBILI INC-ADR

Digital Entertainment

1.93

10.61

0.22

WEIBO CORP-SPON ADR

Social Media

1.13

21.04

0.21

ARGENX SE

Genomics

1.00

15.00

0.15

APTIV PLC

Future Cars

1.14

12.16

0.14

NXP SEMICONDUCTORS NV

Future Cars

0.96

13.76

0.14

FORD MOTOR CO

Future Cars

1.11

11.11

0.13

CORTEVA INC

Genomics

1.01

13.60

0.13

FORTINET INC

Cyber Security

0.81

16.65

0.13

MICROCHIP TECHNOLOGY

Robotics & Automation

0.91

12.41

0.12

SEA LTD-ADR

Digital Entertainment

1.11

8.76

0.11

 Past performance is no guarantee of future performance. Source of all data: Solactive. Data as of 28.02.2021

 

Outlook

As new remote work patterns gain traction over the medium term, Cloud Computing spending continues to dominate – exceeding all non-Cloud spending on IT.  AI and 5G are facilitating the expansion of Edge computing which will boost Cloud spending.  The majority of corporate IT budgets are now devoted to Cloud spending.

Hybrid/Multi-cloud usage is set to spike further, allowing more services across public, private and edge environments.  This will enable Healthcare, Digital Entertainment, Social Media and AI-Robotics to scale up even faster.

Cybersecurity is likely to be a big beneficiary of the WFH trends given the largest ever cyberattack recently on the US Government (Solar Winds). The Biden Administration is planning for big cybersecurity spending outlays, likely to exceed $10bn this year.[14]

The size of Blockchain is expected to grow from $3bn in 2020 to $39.7bn by 2025 - a CAGR of 67.3%.[15]

Blockchain is the underlying technology powering Cryptocurrencies, but has many other uses. If Cryptocurrencies were a car, then Blockchain is its motor.  Key areas Blockchain is already playing a role:  Digital IDs, Rewards/Loyalty programs, Copyright protection, Digital voting, Real estate transfers, Medical records, Wills.

According to Gartner Research blockchain technology is expected to create more than $176 billion dollars’ worth of business value by 2025 and $3.1 trillion by 2030 (below).

 

For illustrative purposes only. Past performance is no guarantee of future performance. Source: https://media.consensys.net/gartner-blockchain-will-deliver-3-1-trillion-dollars-in-value-by-2030-d32b79c4c560

 

Product Details

HAN-GINS Tech Megatrend Equal Weight UCITS ETF (ITEK) is a UCITS compliant 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.

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.

Visit the Technology ETF Fund Page for more information.

 

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