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Tech Megatrends Monthly Report | July

 

Learn more about our Equal Weight ETF.

Key Takeaways

Big Tech post Record Earnings - impressive 2nd quarter results:

  • Microsoft had record quarterly revenue, powered by Azure Cloud revenue.[1]
  • Google advertising revenue hit new record (up 69% yoy), boosted by YouTube and Search.[2]
  • Apple posted record profits on strong iPhone 12 launch with 5G.
  • Tesla’s 2nd quarter profit soared to record $1.1bn - doubling deliveries to 206,000 cars.[3]
  • COVID still fast-tracking digital adoption across Telemedicine, Data/Analytics, Wearables, Biotech, Gene Editing & Robotics.• Cyberattacks – SolarWinds, Colonial Pipeline, Meat factories - driving demand to upgrade cybersecurity. 

 

Performance Review

Our Tech Megatrend Equal Weight ETF (ITEK) gained 4.7% in June and is up 62.8% over 12 months. ITEK continues to benefit from fast adoption rates across the Digital Revolution.

For 2021, Blockchain is up 24.3% despite recent weakness, followed by Genomics 16.1%, Future Cars 15.9%, Robotics/Automation 14.7%, Cloud Computing 12.5%, Social Media 11.0%, Digital Entertainment 9.2% and Cybersecurity 7.7%.

For June – these following five subthemes all produced more than 6% gains – led by Cloud Computing (7.6%), Cybersecurity (6.7), Robotics (6.4%), Future Cars (6.3%) and Social Media (6.1%).

Cybersecurity and Robotics are increasingly in demand – due to large scale hacks and the growth of AI and onshoring respectively.

NVIDIA’s continues to be a standout performer in the AI space.  Second quarter earnings form Big Tech have impressed – with record revenues.  The digital revolution continues to be the main beneficiary of COVID – as their online platforms are easily accessible and scalable.

Tesla doubled deliveries in the quarter and hit a record $1.1bn profit.  Along with Biden’s environmentally friendly policies – EV cars will likely become increasingly mainstream in the US and likely catch up to China’s adoption rates.[4]

Genomics is being used within mainstream medicine as CRISPR and other editing techniques provide countless ways to customise medical treatment – possibly providing huge cost savings.

Past performance is no guarantee of future performance. Source of all data: GinsGlobal and Bloomberg. Data as of 30.06.2021. Please note that all performance figures are showing net data. 

Subtheme

% Return Contribution

% Average Weight

% Performance of category

Genomics

0.12

14.05

0.85

Digital Entertainment

0.23

12.43

1.85

Robotics & Automation

0.92

14.49

6.35

Blockchain

0.14

9.54

1.47

Future Cars

0.75

11.92

6.29

Cloud Computing

1.02

13.46

7.58

Social Media

0.66

10.81

6.11

Cyber Security

0.89

13.20

6.74

Past performance is no guarantee of future performance. Source of all data: Solactive. Data as of 30.06.2021.  

 

HAN-GINS Tech Megatrend Equal Weight UCITS ETF – Performance (As of 30.06.21)

 

1M

3M

6M

YTD

12M

SI

HAN-GINS Tech Megatrend UCITS ETF

4.72%

4.14%

13.84%

13.84%

62.78%

111.08%

Solactive Innovative Technologies Index (NTR)

4.78%

4.29%

14.00%

14.00%

63.43%

113.93%

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 30/06/2021. Please note that all performance figures are showing net data. 

 

Industry News

Big Tech post Record Earnings - impressive 2nd quarter results:

  • Microsoft had its best ever quarterly revenue - Azure Cloud revenue up 51% yoy. Teams now >250mn users and Xbox sales up 170% yoy.
  • Google parent Alphabet enjoyed biggest % jump in quarterly sales in 14yrs. Advertising revenue up 69% yoy; YouTube had blowout qtr.
  • Apple posted its best fiscal 3rd qtr in its 45-year history. Record profits on strong iPhone 12 launch with 5G. (up 50% yoy). All product lines >12% growth yoy.
  • Tesla’s Quarterly Profit soared to record $1.1bn - doubling deliveries to 206,000 cars.
  • HAN-GINS Tech Megatrend Equal Weight ETF = low-cost, diversified way to access the digital revolution with 114 holdings. (ITEK - LSE listed)

Sources of all data: https://www.theguardian.com/technology/2021/jul/27/google-apple-and-microsoft-to-report-record-breaking-profits and https://www.cnbc.com/2021/07/27/alphabet-googl-earnings-q2-2021.html

More cybersecurity data breaches occurred in 2020, than the prior 15 years - despite a 10% growth in cybersecurity spending last year to $53bn.[5]

For illustrative purposes only. Source: https://www.greencarcongress.com/2017/07/20170706-bnef.html

 

EVs will likely comprise the majority of new car sales worldwide by 2040, and account for 33% of all the light-duty vehicles - according to a new forecast by Bloomberg New Energy Finance (BNEF). This is a large jump compared to BNEF’s prior forecast of 35% EV new car market share by 2040.  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. 

Blockchain besides being used by cryptocurrencies due to its distributed ledger – is also being used in legal contracts, tracking supply chains, and sharing healthcare data.  The growing areas of activity is shown below – includes cross-border payments. Global spending is forecasted to grow 4-5 fold within 4 years.

For illustrative purposes only. Past performance is no guarantee of future performance. 

 

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

The table below shows our top gainers in June – spread across most of our subthemes. ITEK’s global mix of 114 holdings is representative of the Digital Revolution. Our US exposure is currently 54.7%, with Asia 19.2% and Europe at 17.1%.  Most of our Top 10 holdings are between 1.0% - 1.2%, prior to rebalancing.

  • ITEK is equally weighted across all 8 subthemes and 114 underlying holdings.
  • ITEK’s Top 5 holdings equal just 7%, and Top 10 only 12.3% of its portfolio.
  • 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.  

 

Our top contributors were led by Future Cars, Digital Entertainment, Cloud, Cybersecurity and Robotics/Automation. Standouts were NIO, NVIDIA, ROKU and RIOT Blockchain. 

 

Top Contributors - June 2021

Holdings

Index Category

% Average Weight

Total Return (%)

Contribution to Return (%)

NIO INC – ADR

Future Cars

0.82

37.75

0.27

NVIDIA CORP

Robotics & Automation

1.11

23.16

0.24

ROKU INC

Digital Entertainment

0.78

32.46

0.24

RIOT BLOCKCHAIN INC

Blockchain

0.71

38.85

0.24

BYD CO LTD-H

Future Cars

0.90

29.04

0.23

MARATHON DIGITAL

Blockchain

0.88

26.65

0.21

TRADE DESK INC/THE – A

Digital Entertainment

0.66

31.53

0.20

EXTREME VEHICLE BATTERY

Blockchain

0.57

39.02

0.19

MARVELL TECHNOLOGY INC

Robotics & Automation

0.92

20.77

0.18

PINTEREST INC- CLASS A

Social Media

0.91

20.90

0.18

BIONTECH SE-ADR

Genomics

1.73

9.75

0.17

BLACKBERRY LTD

Cyber Security

1.12

19.15

0.17

ADOBE INC

Cloud Computing

0.99

16.06

0.15

TWITTER INC

Social Media

0.84

18.64

0.15

FASTLY INC - CLASS A

Cyber Security

0.62

26.30

0.15

ADVANCED MICRO DEVICES

Robotics & Automation

0.83

17.30

0.14

SPLUNK INC

Cloud Computing

0.74

19.29

0.14

ZOOM VIDEO COMMUNICATION

Cloud Computing

0.81

16.74

0.13

Past performance is no guarantee of future performance. Source of all data: Solactive. Data as of 30.06.2021. Please note that all performance figures are showing net data. 

 

Outlook

Biden’s clean energy and infrastructure plans are likely to pass Congress and boost EV spending dramatically.

Big Tech continues to benefit from remote WFH behaviours, but many smaller Cloud, Cybersecurity and Social Media players are also benefiting from the shift. The majority of corporate IT budgets are now devoted to Cloud spending – as hardware budgets have been dramatically cut.

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. 

 

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