BetaShares launches Asia Technology Tigers ETF on ASX

Sep 27th, 2018 | By | Category: Equities

Sydney-based ETF issuer BetaShares has launched the BetaShares Asia Technology Tigers ETF (ASIA AU) on the Australian Stock Exchange, providing exposure to large-cap technology and online retailers with a focus on Asia.

BetaShares launches Asia Technology Tigers ETF on ASX

David Bassanese, Chief Economist, BetaShares.

The fund tracks the recently unveiled Solactive Asia Ex-Japan Technology & Internet Tigers Index.

The index consists of the 50 largest stocks from the technology and online retail sectors that have the majority of their business in Asia (excluding Japan).

Eligible countries include China, Hong Kong, Taiwan, Singapore, South Korea, Malaysia, Philippines, Pakistan, Thailand, Indonesia, India and Vietnam.

Constituents are weighted according to free-float market capitalization, subject to a 10% cap per security. It is reconstituted and rebalanced on a semi-annual basis.

To reduce turnover, new entrants to the index must rank higher than the fortieth stock by market cap, while firms being removed from the index must rank below the sixtieth stock by market cap.

The majority of constituents are drawn from three countries: China (which has a country weighting of 42.8% in the index), Taiwan (25.4%) and South Korea (21.4%). Information technology is by far the largest sector exposure with a weight of 93.2%, followed by consumer discretionary at 5.0%.

The largest constituents are Taiwan Semiconductor (12.9%), Alibaba (9.9%), Samsung Electronics (9.3%), Tencent (9.1%) and Baidu (7.5%).

According to BetaShares, the fund provides exposure to one of the fastest-growing themes in the Asian region.

David Bassanese, Chief Economist at BetaShares, writes, “Although American-based tech giants – such as Google, Facebook and Amazon – are already household names, it may surprise some investors to know that Asia has technologically leapfrogged the US in several respects and has many successful tech megastars of its own.

“These Asian tech tigers – exposure to which is now available via our newest ETF on the ASX – provide Australian investors another tech-based global growth opportunity, and one that also offers handy diversification outside of the red-hot US technology market.”

BetaShares points to several key metrics highlighting the current dynamism and potential of the Asian technology growth story. Despite having a much lower per capita income, China had 772 million internet users as at end of 2017, more than twice as many as in the US; a fifth of Chinese retail spending was transacted online last year, compared to only 10% in the US; and 40% of online payments in China are made via mobile phone, compared to only 15% in the US.

The Asia ex-Japan technology sector has also performed strongly where it matters to investors, in share price performance, returning 22% per annum over the past five years to 31 December 2017, compared to 13% for global shares in general.

Timo Pfeiffer, Head of Research at Solactive, said, “The fantastic growth rates in recent years of online retailers all over the world are beyond comparison. With its steadily rising middle class, Asia is destined to continue this track of success in the technology and online retail space. The Solactive Asia Ex-Japan Technology & Internet Tigers Index gives investors the opportunity to track this exciting market.”

The fund comes with management fees of 0.67%. Distributions are made to investors on an annual basis.

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