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Tech Megatrend Monthly Report | June

 

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  • Cyberattacks such as SolarWinds, Colonial Pipeline, and Meat factories are driving demand to upgrade cybersecurity.
  • Cyber losses grew to $1.8bn in 2020[1]
  • Biden’s stimulus/budget - boosting spending on Future Cars ($174bn), Cybersecurity & Genomics (tackling cancer & mainstream diseases).[2]
  • US govt banning sale of non EV cars from 2035 - fast-tracking EV adoption rates to catch China.
  • Online Advertising growing fastest in Social Media rather than Search.
  • Big Tech is moving into Healthcare aggressively with huge deals being announced recently (HCA & Nuance).
  • COVID - huge gamechanger for Tech & Healthcare industry.  Fast tracking spending by 5yrs.
  • Pandemic has fast-tracked digital adoption across Telemedicine, Data/Analytics, Wearables, Biotech, Gene Editing & Robotics.
  • WFH behaviour will continue to boost Cloud spending post-COVID – rising to $500bn within 2 years.[3]
  • 25% annual growth in digital health predicted to 2025.[4] 

 

Performance Review

HAN-GINS Tech Megatrend Equal Weight UCITS ETF (ITEK) lost 3.4% in May but remains up 65.9% over 12 months.  The equally weighted ETF continues to benefit from fast adoption rates across the Digital Revolution.   

Tech Megatrend ETF (ITEK) Returns

May

12 Month*

-3.37%

65.86%

Past performance is no guarantee of future performance. Source: Solactive, HANetf *12 Month figures based on 01.06.20 - 31.05.21

 

For 2021, Blockchain is up 22.3% despite recent weakness, followed by Genomics 15.0%, Future Cars 9.3%, Digital Entertainment 7.1%, Robotics/Automation 7.8% and Social Media 4.6% - our winning themes. 

Genomics is increasingly seen as a mainstream medical plater – and leading beneficiary of the COVID pandemic. Recent mRNA breakthroughs have led to a significant rerating.  This continued in may with these leading players enjoying gains:  BionTech up 8.4%, Genmab 10.2%, Beigene 7.5% and Innovent Biologics 11.4%.

Due to recent rebalance, our equal weighted approach ensures that all our eight subthemes are all currently between 10.6%-13.7% weightings within ITEK.  ITEK has beaten most competitors over YTD, 6 months and 1yr.

Robotics and Automation is increasingly an exciting subtheme and top performer.  NVIDIA’s advanced chips are propelling its gains – up 8.2% last month.  The onshoring of robotics back to the US is another key theme propelling robotics and chip makers. Future Cars, Digital Entertainment and Cybersecurity populated the bulk of our reminding top performers – on the strength of Biden’s green policy rollout (banning traditional cars from 2035) – and growing concerns of large scale cyberattacks in the US.  Gaming stocks such as Nintendo and Activision are propelling online entertainment as a theme – as global cloud usage continues to spike (particularly in Asia) - and faster internet speeds means traditional gaming consoles will no longer be required.

Past performance is no guarantee of future performance. Source of all data: GinsGlobal / Solactive. Data as of 31.05.2021

 

Contribution

Total Return (%)

% Average Weight

% Performance of category

Genomics

0.10

13.78

0.73

Digital_Entertainment

-0.22

12.55

-1.75

Robotics & Automation

0.11

14.20

0.77

Blockchain

-3.09

10.70

-28.88

Future Cars

0.33

11.43

2.89

Cloud Computing

-0.19

13.24

-1.44

Social Media

-0.11

10.72

-1.03

Cyber Security

-0.15

12.53

-1.20

Past performance is no guarantee of future performance. Source of all data: Solactive. Data as of 31.05.2021

 

HAN-GINS Tech Megatrend Equal Weight UCITS ETF Performance (As of 31.05.21)


1M

3M

6M

YTD

12M

SI

HAN-GINS Tech Megatrend UCITS ETF

-3.37%

-1.94%

17.00%

8.70%

65.86%

101.56%

Solactive Innovative Technologies Index (NTR)

-3.33%

-1.82%

17.17%

8.80%

66.70%

104.17%

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 31/05/2021

 

Industry News

More cybersecurity data breaches occurred in 2020, than the prior 15 years - despite a 10% growth in cybersecurity spending last year to $53bn.  These are being driven by more severe ransomware attacks - in some cases disrupting hospitals.[5] 

For illustrative purposes only.

 

Europe was a key driver of EV car sales in 2020 – capturing 11.5% of total new car sales in the region.  In total, 83% of all EVs sold in 2020 were sold in either Europe (42%) or China (41%).  Until Biden’s election – the US did not have legislation or policies providing enough sales EV sales push as these two regions.  This is starting to change now.  EV sales are predicted to be 48% of all new car sales globally in 2030.[6]

There is pent-up demand for EV cars – as they rely on semiconductors.   EVs rely more on electronics than traditional vehicles.  Being far more software driven, any long-term chipmaker disruptions could pose a problem for EV sales.  The Biden push is helping to rerate EV players upwards.

For illustrative purposes only.

President Biden is using all the levers of government, from purchasing power, R&D, tax, trade, and investment policies - to ensure America become the world’s leader in EV manufacturing, including all input materials and parts.[7] 

Genomics holdings such as BionTech and Illumina are well positioned as Gene Therapies become mainstream in the detection of diseases and play a key role in Precision (customised) medicine.

 

Constituent News

ITEK’s global mix of 114 holdings is representative of the Digital Revolution. Our US exposure is currently 52.6%, with Asia 24.7% and Europe at 16.8%.  Most of our Top 10 holdings are between 1.0% - 1.2%, prior to rebalancing. 

  • ITEK is an equally weighted ETF across 8 subthemes and 114 underlying holdings.
  • It is a rules-based index with broad diversification. 
  • Holdings of up to 15 per subtheme, are equally weighted too.
  • ITEK’s Top 5 holdings equal just 7%, and Top 10 only 12.3% of its portfolio.
  • No overweight or concentrated positions – Top 10 holdings are weighted the same as all others.
  • Provides equal exposure to all key Digital Revolution themes.
  • ITEK is considerably underweight large Megacaps compared to competitors.
  • Unlike Nasdaq and other tech benchmarks which remain very overweight a few Big Tech players, ITEK’s FAANG exposure remains under 7% - versus 40% in the Nasdaq 100. 

 

ITEK is a unique Tech ETF by adding Blockchain holdings as a separate subtheme. Our holdings are not all heavily correlated to cryptocurrencies, but do include crypto miners, administrators and other digital ledger players. As the demand for digital ledgers and cryptocurrencies grow during COVID, we expect two more Blockchain firms to join ITEK’s holdings at our next rebalance, rounding out this subtheme at 15 holdings. 

Our Top performing contributors are listed below for May - by subtheme and holdings.  These were led by Genomics, Digital Entertainment, Cybersecurity and Robotics/Automation. The Table below shows the volatility of Tech themes and just how tough it is to time performance.   ITEK's low-cost ETF covers all key digital themes with consistent performance.

Top Contributors – May 2021

Holdings

Index Category

% Average Weight

Total Return (%)

Contribution to Return (%)

BIONTECH SE-ADR

Genomics

1.54

8.35

0.12

BLACKBERRY LTD

Cyber Security

0.74

16.13

0.12

ARISTOCRAT LEISURE LTD

Digital Entertainment

1.13

11.01

0.11

INNOVENT BIOLOGICS INC

Genomics

0.95

11.39

0.11

GENMAB A/S

Genomics

0.98

10.15

0.10

MANGO EXCELLENT MEDIA CO

Digital Entertainment

0.95

10.16

0.10

NXP SEMICONDUCTORS NV

Future Cars

0.94

9.82

0.09

BYD CO LTD-H

Future Cars

0.69

12.37

0.09

VOLKSWAGEN AG-PREF

Future Cars

1.08

7.01

0.08

NVIDIA CORP

Robotics & Automation

0.94

8.23

0.08

BEIGENE LTD

Genomics

0.91

7.54

0.08

MAXIM INTEGRATED PRODUCTS

Future Cars

0.89

8.52

0.08

FORTINET INC

Cyber Security

1.07

7.01

0.07

WATERS CORP

Genomics

1.00

7.46

0.07

NETEASE INC

Digital Entertainment

0.90

7.26

0.07

NINTENDO CO LTD

Digital Entertainment

0.88

7.88

0.07

ANALOG DEVICES INC

Future Cars

0.87

7.92

0.07

SEAGEN INC

Genomics

0.84

8.06

0.07

Past performance is no guarantee of future performance. Source of all data: Solactive. Data as of 31.05.2021

 

Outlook

Biden’s huge clean energy and infrastructure plans will boost EV spending dramatically.  The US government banning the sale of traditional gas cars from 2035 - is fast-tracking EV adoption rates.

New remote WFH behaviours will ensure 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.

The move away from hardware and onsite servers to remote usage – means Cloud is being hardwired into most corporation’s operations and software systems.

Demand for cybersecurity is expanding and likely to also be big beneficiary of the WFH trends along with increasingly large cyberattacks.   The SolarWinds, Colonial Pipeline and Meat factories hack attacks, are driving demand to upgrade cybersecurity.

US government bans on the future sale of non-EV cars from 2035 will help the US fast-track EV adoption rates in line with the EU and China experience.

There is little doubt that COVID continues to be a huge gamechanger across various Technologies.  In the healthcare space it has likely fast-tracked spending and adoption rates by at least 5yrs - across Telemedicine, Data/Analytics, Wearables, Biotech, Gene Editing & Robotics.

 

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