Investing in Australia's dynamic tech sector - 23 June 2020 Max Cunningham
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Investing in Australia’s dynamic tech sector 23 June 2020 Max Cunningham, ASX Executive General Manager, Issuer Services and Investment Products Alistair Mills, BetaShares Associate Director Portfolio Analytics & Adviser Business
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Confidential – may not be distributed without the consent of BetaShares Capital
Important information The information contained in this presentation is general information only and does not constitute personal financial advice. It does not take into account any person’s financial objectives, situation or needs. The information is provided for information purposes only and is not a recommendation to make any investment or adopt any investment strategy. This presentation may include information or views provided by a third party. Such information or views do not necessarily represent BetaShares’ opinion or views. BetaShares does not endorse, and is not accountable for, any such information. BetaShares has not independently verified such information and accepts no responsibility for the accuracy or completeness of such information. BetaShares Capital Limited (ABN 78 139 566 868, AFSL 341181) (BetaShares) is the issuer of the BetaShares Funds. Investments in BetaShares Funds are subject to investment risk and investors may not get back the full amount originally invested. Any person wishing to invest in BetaShares Funds should obtain a copy of the relevant PDS from www.betashares.com.au and obtain financial and tax advice in light of their individual circumstances. Past performance is not indicative of future performance. Future outcomes are inherently uncertain. Actual outcomes may differ materially from those contemplated in any opinions, estimates or other forward-looking statements given in this presentation. Confidential – may not be distributed without the consent of BetaShares Capital
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Confidential – may not be distributed without the consent of BetaShares Capital
Speakers
Max Cunningham Alistair Mills
Executive General Manager, Associate Director –
Issuer Services and Investment Portfolio Analytics & Adviser
Products, ASX Business, BetaShares
Confidential – may not be distributed without the consent of BetaShares Capital
ASX: the “Global Home” for mid-cap Tech Betashares – ATEC webinar June 2020
A highly active capital market
$8b
of equities traded daily*
120+
New listings annually
2,200 4th
Largest pool of
Listed Australian and
global companies, pension funds globally
across diverse sectors
Long history Robust
of successful regulatory
listing and funding of early
environment
stage growth companies
*12 month rolling average across ASX & Chi-X
Breakdown by Number Breakdown by Market Cap
Proven track record across all
industry sectors
Total Listed Entities: Total Market Cap:
2,198 A$2.3 trillion
> Small and mid-cap growth companies
> Dominant resources and financials sectors
> An emerging technology sector
> World-class healthcare sector 40% Resources (Energy + M&M) 19% Resources (Energy + M&M)
14% IT and Communication Services 18% Financials
11% Consumer Discretionary & Staples 15% Real Estate
11% Industrials & Materials (ex M&M) 14% Industrials & Materials (ex M&M)
8% Health Care 12% Health Care
7% Financials 11% Consumer Discretionary & Staples
7% Real Estate 8% IT and Communication Services
2% Utilities 3% Utilities
Source: Bloomberg & ASX Official List, 22 May 2020 aggregated across global markets. May exclude companies with
suspended securities or subject to poor liquidity where market capitalisation cannot be determined.
ASX: A vibrant exchange for listed tech companies
Total ASX listed technology companies
The Tech Sector^:
250
200 189
197
205 #1 Fastest growing sector
By number of new listings over
the past 5 years.
#2
179
Largest Sector
Over the past 5 years
146
150
100
101 #3 Globally in Tech IPOs
US$500m market cap and below
50
$4b IPO Capital Raised
Over the past 5 years
0 2014* 2015 2016 2017 2018 2019
* As at 30 June 2014
#23 Listed tech ‘unicorns’*
2019: Top 5 tech IPOs
$287m/$1,364m $211m/$661m $145m/$689m $110m/$325m $100m/$453m
^ As at 31 December. Source: Bloomberg, ASX internal data. Using GICs Information Technology sector.
* As at 12 June 2020
Tech Sector: Led by the WAAAX stocks
Price Performance since ASX Listing^ IPO and Secondary Capital Raised 2015 – 19*
7,000 3,500
6,066%
6,000 3,000
5,000 4,675% 2,500
Price Performance %
4,000
2,000
$m AUD
3,000
1,500
2,000 1,766% 1,833%
1,000
1,000
502%
500
-
Wisetech Afterpay Appen Alitum Xero
-
2015 2016 2017 2018 2019
IPO Secondary
$6.5b $12.8b $3.8b $4.9b $13.3b
Source: *ASX internal Data, Dealogic 31 December 2019. Includes GIC Sectors Information Technology & Communication
Services and GICS Sub sectors Internet & Direct Marketing Retail, Consumer Electronics, Health Care Technology &
Health Care Equipment; ^Bloomberg, 1 June 2020. Past performance is not indicative of future returns.S&P/ASX All Technology Index (XTX)
> Launched February 2020 with 46 constituents
> Total market cap ~$110bn^
> Investable index*
> Top 10 constituents at launch;
Historical Performance
Data rebased at 100, total return
S&P/ASX All Technology Index S&P/ASX 300 Index
* You cannot invest directly in an index. The BetaShares S&P/ASX Technology Sector ETF aims to track the S&P All Technology Index. Past performance is not
indicative of future performance of the index or any ETF that seeks to track the index. Doesn’t take into account ETF fees and costs. ^As at 12 June 2020Top 10 constituents
S&P/ASX All Technology by Market Cap Growth in market cap of indices* Country
of origin
Index (XTX) by
500
at June 2020 rebalance** 450
01 43
400
numbers 350
300
Australia
02
250
The S&P/ASX All Technology Index 200
3
23
launched on 24th February 2020. 150
There were 46 foundation
constituents, which has grown to
03 Listed tech 100
New Zealand
‘unicorns’
50
50 at the first rebalance across a
04
0
3
As at 12 June 2020
Sep-19
Jan-19
Mar-19
Jan-20
Mar-20
Sep-14
Sep-15
Sep-16
Sep-17
Mar-18
Sep-18
Jan-18
Nov-18
Nov-19
Mar-14
Jan-15
Mar-15
Jan-16
Mar-16
Jan-17
Mar-17
Nov-17
May-19
May-20
Nov-14
Nov-15
Nov-16
May-14
May-15
May-16
May-17
May-18
Jul-19
Jul-17
Jul-18
Jul-14
Jul-15
Jul-16
range of GICS codes, ensuring the
$110b+
Index is representative of United States
05
All Tech Index S&P/ASX 200 NASDAQ S&P 500
ASX companies engaged
in the technology
Average daily value traded of index constituents* 1
sector.
06 800
Ireland
07 Total market capitalisation
700
600
*Historical
information
AUD ($M)
08
500
presented is based on
5
400 Index inclusion
criteria being applied
09 Health Care 4 4
Internet 1
300 retrospectively.
Interactive and Direct Consumer 200
Technology Media and Marketing Electronics
Services
10
100
-
Q1 14 Q2 14 Q3 14 Q4 14 Q1 15 Q2 15 Q3 15 Q4 15 Q1 16 Q2 16 Q3 16 Q4 16 Q1 17 Q2 17 Q3 17 Q4 17 Q1 18 Q2 18 Q3 18 Q4 18 Q1 19 Q2 19 Q3 19 Q4 19 Q1 20 Q2 20
36
Information
XTX Index
inclusion
requirements:
0.3
Minimum investable
30%
Minimum relative
$120k
Minimum daily
Technology GICS Sectors weight factor liquidity ratio value traded
$120m Quarterly
represented For more information
in the Tech Index asx.com.au/alltechindex
Market capitalisation Index rebalance Follow us @ ASX
(minimum 3 monthly average float adjusted) Source: Index rebalance information sourced from Betashares and Bloomberg as at 12 June 2020 Follow us on LinkedIn
** Market Cap sourced from Bloomberg as at 12 June 2020Why ASX?
• Main board listings
• Mainstream coverage
• Genuine tech exchange
• International demand
• Early index inclusion
• Size and quality of companies
continue to increase
Capital with confidence - Listing with ASXInvestment solutions
Technology’s global footprint
Technology and communicating sector weighting
Source: Morningstar, BetaShares. Data as at 31st May 2020.
Confidential – may not be distributed without the consent of BetaShares CapitalATEC – example portfolio holdings
Company Description
► Xero is one of the fastest growing ‘software as a service’ companies globally, offering a cloud-based
accounting software platform for small and medium-sized businesses.
► Afterpay Touch Group is a technology-driven payments company that enables customers of
participating retailers to make purchases now and pay for them in four fortnightly payments without
any interest or upfront fees.
► REA Group is a multinational digital advertising business specialising in property.
► Carsales.com Ltd is the largest online automotive, motorcycle and marine classifieds business in
Australia.
As at 17 June 2020. The above information has been sourced from company websites or other publicly available information. No assurance is given that these companies will remain in
the Fund’s portfolio or will be profitable investments.
Confidential – may not be distributed without the consent of BetaShares CapitalDispersion of stocks
1 year price returns as at 31 May 2020
Source: Bloomberg, BetaShares. Stock price returns from 31st May 2019 to 31st May 2020. Past Performance is not indicative of future returns.
Confidential – may not be distributed without the consent of BetaShares CapitalTiming is hard
Last year’s winners
Source: Bloomberg, BetaShares. 1 year returns prior to stated date. . Past Performance is not indicative of future returns
Confidential – may not be distributed without the consent of BetaShares CapitalTiming is hard
Last year’s losers
Source: Bloomberg, BetaShares. 1 year returns prior to stated date. . Past Performance is not indicative of future returns
Confidential – may not be distributed without the consent of BetaShares CapitalATEC’s Index vs S&P/ASX 200 Index
S&P All Technology Index vs S&P/ASX 200 Index return
April 2014 to 31 May 2020
Source: Bloomberg, S&P Dow Jones Indices. Index launch date is 21 February 2020. Index performance prior to launch is back-tested by the index provider using the index methodology in effect at the
date of launch. Does not take into account ATEC fees and costs. You cannot invest directly in an index. Past performance, whether simulated or actual, is not an indicator of future performance of
the index or ATEC.
Confidential – may not be distributed without the consent of BetaShares CapitalBenefits of market cap weighting
ATEC incorporates a modified market-cap weighting scheme (with a single security cap of 25%)
We believe that it is important for the market to dictate company weights in thematic investing
We do not know which technology company will be the biggest and most successful in 20 years,
but in early stage industries a market cap weighting scheme is important because it allows one
to own more of a company as it grows and succeeds and reduces the weight of companies as
they diminish in value
By contrast, an equal weight approach may lead to selling winners and
buying losers at each rebalance, resulting in an anti-momentum strategy in a
highly momentum-driven investment approach.
Confidential – may not be distributed without the consent of BetaShares CapitalBetaShares S&P/ASX Australian Technology ETF
Investment objective The Fund aims to track the performance of the S&P/ASX All Technology Index (Index) ASX: ATEC
(before fees and expenses).
The Index provides diversified exposure to ASX-listed companies in a range of tech-related market segments
such as information technology, consumer electronics, online retail and medical technology.
Key information Top 10 portfolio holdings*
S&P/ASX All Weighting
Index name Technology Index Afterpay Ltd 14.0%
Xero Ltd 13.0%
Bloomberg Index Code ATEC AU
Computershare Ltd 9.4%
# of components* 46 REA Group Ltd 7.0%
Underlying assets Equities Altium Ltd 6.2%
NEXTDC Ltd 5.6%
Management cost 0.48% p.a.^
carsales.com Ltd 5.5%
Inception Date 5 March 2020
Appen Ltd 4.4%
^ Other fees and costs, such as transactional costs, may apply. Refer to WiseTech Global Ltd 4.2%
the PDS for more information.
Technology One Ltd 3.3%
*As at 31 May 2020
Confidential – may not be distributed without the consent of BetaShares CapitalBenefits of ATEC
Access the growth potential of the Australian technology sector
ATEC will provide diversified exposure to the leading ASX-listed companies in the dynamic
Australian technology and related sectors.
Portfolio diversification
An allocation to ATEC can provide valuable diversification for portfolios that are heavily weighted
to the established financial and mining companies that dominate the Australian market.
Transparent
Full portfolio holdings and net asset value per unit will be available daily on our website.
Cost-effective
Index-tracking approach means no active manager fees. Management costs are only
0.48% p.a.*
*Other fees and costs, such as transactional costs, may apply. Refer to the PDS for more information.
Confidential – may not be distributed without the consent of BetaShares CapitalHow do you actually invest in ETPs?
Buying and selling ETFs ETFs are bought and sold exactly like shares on the ASX, so there’s no need to open a separate broking account if you already have one. Simply use the ASX ticker for the fund you wish to trade. Confidential – may not be distributed without the consent of BetaShares Capital
ETF trading - best practice
1 2 3
Use limit orders Avoid trading For international
near market ETFs and futures
“’Use limit orders’ is the open and close markets:
‘wash your hands’ of
ETF trading” Mind the clock
– Ben Johnson, Morningstar’s
Head of Global ETF research
Confidential – may not be distributed without the consent of BetaShares CapitalThings to consider Investment risk: The value of an investor’s portfolio can go down as well as up. There are risks associated with an investment in the BetaShares S&P/ASX Technology Sector ETF, including market risk, technology sector risk and concentration risk. For more information on risks and other features of the Fund please see the Product Disclosure Statement (PDS). No guarantees: Future outcomes are uncertain – desired return outcome may not be achieved. General information only: Today’s discussion does not take into account any person’s individual circumstances and is not personal financial advice. Professional advice: Investors should seek professional financial advice before investing. Research: See relevant PDS for more information about risks and other features of each fund. Confidential – may not be distributed without the consent of BetaShares Capital
Questions? Confidential – may not be distributed without the consent of BetaShares Capital
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