Investing

What are the best technology ETFs?

How to invest in technology using an exchange traded fund (ETF). We compare the best tech ETFs on the ASX for 2022.

Technology has revolutionised the way people are living by creating a more interconnected community, reducing the cost of software, and improving processes and efficiencies. 

Whether it’s embracing the cloud platform, using software as a service (SaaS) businesses, or consuming streaming content from an internet-connected device, technology is a growing sector that investors want exposure to. 

The Australian share market only has a 5% allocation to technology companies compared to nearly 30% in the U.S. One of the best ways to access the most innovative and revolutionary global companies is via an exchange traded fund (ETF).

The following ETFs are listed on ASX that track the broad technology sector:

  • BetaShares NASDAQ 100 ETF (NDQ)
  • BetaShares Asia Technology Tigers ETF (ASIA)
  • ETFS Morningstar Global Technology ETF (TECH)
  • ETFS FANG+ ETF (FANG)

Note: NDQ also has a hedged version called the BetaShares NASDAQ 100 ETF – Currency Hedged (HNDQ).

Stockspot reviews and compares more than 250 ETFs in our annual Stockspot ETF Report. In this article, we road test the best technology ETFs in Australia across a range of different metrics to provide our analysis on the most suitable choice for investors.

Size

NDQ is the largest ETF in the broad technology category managing $2.6 billion in funds under management, largely due to its first-mover advantage (launching in May 2015), strong returns and because it tracks a well-known index. ASIA has quickly amassed $505 million in its four-year tenure, while TECH and FANG have $345 million and $250 million respectively. 

Costs and slippage

When it comes to cost, there are two components for ETF investors to consider – the management fee of the ETF and the costs of trading (i.e. slippage). Slippage refers to how much you lose by crossing the spread when buying or selling an ETF. It’s calculated by the average percentage difference between the best buyer and seller during market hours.

FANG is the lowest cost technology ETF charging 0.35% per year. The spreads of ASIA, TECH and FANG are quite similar, however, NDQ is the clear leader with tighter spreads of 0.05%. ASIA is the most expensive ETF in this category charging 0.67% due to tracking Asian markets which may not be as liquid or have a narrower focus.

TICKER CODEMANAGEMENT FEEBUY/SELL SPREADS (SLIPPAGE)
NDQ0.48%0.06%
ASIA0.67%0.23%
TECH0.45%0.20%
FANG0.35%0.18%

Liquidity

NDQ is the most liquid technology ETF, trading over $13 million in average daily volume. ASIA and FANG are the next most traded tech ETFs with around $2.5 million traded daily. TECH is the least liquid in the category, only trading less than $1 million daily. 

Returns and track record

Most technology ETFs listed on the ASX do not have a long track record since they have launched over the last few years to capitalise on the strong interest in this sector. NDQ has been the best performing tech ETF returning over 25% p.a. over the last three years. The U.S. technology sector has enjoyed strong performance, outperforming the more geographically diverse TECH ETF which returned 19% p.a. over the same period. ASIA has had a tough year down 32% as regulation in China has dampened returns. This shows that the technology sector can perform very differently due to their focus on certain geographic regions.

TICKER CODE1 Year Return3 Year Return5 Year Return
NDQ19.4%25.2%23.7%
ASIA-32.1%10.9%N/A
TECH3.2%19.1%21.7%
FANG16.3%N/AN/A
Source: ASX as of 31 March 2022. N/A indicates ETF does not have enough track record since listing

Exposure and holdings

While these ETFs track a basket of technology stocks, they can have different underlying holdings and subsequent weights based on the underlying indexes they track. 

NDQ tracks the NASDAQ 100 Index which looks at the top 100 non-financial companies listed on the NASDAQ exchange. ASIA tracks the Solactive Asia Ex-Japan Technology & Internet Tigers Index and has a focus on technology companies in China, Taiwan, South Korea, India and Singapore. TECH tracks the Morningstar Developed Markets Technology Moat Focus Index which comprises up to 50 technology companies with a strong competitive advantage and attractive valuations. FANG tracks the NYSE FANG+ index which equally weights high growth technology companies.

Here are the top 10 holdings in NDQ, ASIA, TECH and FANG:

NDQASIATECHFANG
1AppleFutu HoldingsIntelTesla
2MicrosoftTaiwan SemiconductorsVMwareApple
3AmazonTencentSensata TechnologiesMicrsofot
4TeslaAlibabaMicrosoftAmazon
5NVIDIAInfosysFortiveAlphabet (Class A)
6Alphabet (Class A)MeituanTaiyo YudenMeta
7Alphabet (Class C)Kuaishou TechnologyNXP SemiconductorsAlibaba
8MetaJD.comWiseTechBaidu Inc
9BroadcomNetEaseTyler TechnologiesNVIDIA
10CostcoPinduoduoNICE LtdNetflix
Top 10 Holdings54.8%69.6%40.1%100%
Source: Morningstar as of 31 March 2022

What about other thematic tech ETFs?

While broader technology ETFs are diversified across the whole technology sector, there has been a rise of newer thematic ETFs that track very specific types of technology sectors. 

TickerNameCostSize ($m)1-year return5-year return p.a.
HACKBetaShares Global Cybersecurity ETF0.67%77831.9%20.7%
ROBOETFS ROBO Global Robotics and Automation ETF0.69%254-3.0%N/A
RBTZBetaShares Global Robotics and Artificial Intelligence ETF0.57%182-6.8%N/A
ACDCETFS Battery Tech & Lithium ETF0.69%5234.8%N/A
CLDDBetaShares Cloud Computing ETF0.67%58-8.3%N/A
CUREETFS S&P Biotech ETF0.45%48-29.3%N/A
SEMIETFS Semiconductor ETF0.57%90N/AN/A
ESPOVanEck Vectors Video Gaming and Esports ETF0.55%92-6.9%N/A
IPAYBetaShares Future of Payments ETF0.67%5N/AN/A
DRIVBetaShares Electric Vehicles and Future Mobility ETF0.67%10N/AN/A
FTECETFS Fintech & Blockchain ETF0.69%10N/AN/A
Source: ASX as of 31 March 2022. N/A indicates ETF does not have enough track record since listing


While these niche thematic ETFs offer exposure to new and interesting industries, investors need to be cautious as these ETFs are also susceptible to poor returns shutting down, which is why we avoid niche thematic ETFs for our clients at Stockspot.

Verdict and conclusion

We prefer the broad technology ETFs such as NDQ and ASIA rather than niche technology ETFs. We offer NDQ and ASIA as part of our Stockspot Themes and help to blend them into a broadly diversified portfolio for clients. They are both large in size, have deep liquidity and track broad market indexes that are not too niche.

Technology ETFs do come with their own set of risks, and in order to avoid your portfolio being overly exposed to a tech crash like 2000, we recommend clients only invest a small portion of their overall portfolio in these sector ETFs. The core part of our client’s portfolios are invested in a diversified mix of ETFs across different assets including shares, bonds and gold.

Stockspot builds you a diversified portfolio of low-cost index ETFs to help you grow your wealth

Investment Manager

Marc has previously worked for Morgan Stanley, AMP and KPMG. He holds a Bachelor of Business (Finance/Accounting) from the University of Technology Sydney (UTS), and has completed his Chartered Financial Analyst (CFA) Level 1.

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