There is one key ASX ETF that may be set to benefit from the growth of Australian technology shares.
As many investors are aware, the S&P/ASX 200 Index (ASX: XJO) is highly concentrated on lower growth, blue-chip companies.
In particular, financials and resource/mining companies dominate the economy.
Conversely, Aussie tech only represents 3% of the weight of the ASX 200.
However, over the next two years, the companies in the S&P/ASX All Technology Index (ASX: XTX) are expected to grow earnings above 25%.
According to Betashares, this is projected to outpace the ASX 200 by three times. It is also projected to grow at a higher rate than the US IT sector.
Aussie tech quietly growing
Many investors tend to look overseas to gain exposure to technology markets.
However domestically, Aussie tech companies are posting strong growth.
According to Betashares, from the end of FY23 to FY25, earnings at the ASX 200 level fell 13%.
This is in stark contrast to the remarkable growth experienced in the US led by mega cap technology companies.
However, this underwhelming headline for the ASX 200 perhaps hides the strong pockets of growth.
The Australian Information Technology (IT) sector has achieved a higher rate of earnings growth than its S&P 500 counterpart over this same two-year period.
In FY25, the Australian IT sector grew earnings by a commendable 26.4%, trailing only the complementary Communication Services sector.
ASX ETFs to cash in
For investors bullish on adding a magnified exposure to these Australian tech companies, there is one focussed ASX ETF to consider.
Betashares S&P Asx Australian Technology ETF (ASX: ATEC) provides exposure to leading ASX-listed companies in a range of tech-related market segments such as information technology, consumer electronics, online retail and medical technology.
The fund includes 45 holdings, including ASX shares such as WiseTech Global Ltd (ASX: WTC), Xero Ltd (ASX: XRO), and Pro Medicus Ltd (ASX: PME).
It has posted strong gains over the last year, rising more than 14%.
For investors interested in more global tech exposure, other options include:
- Morningstar Global Technology ETF (ASX: TECH) – Includes 40 global holdings positioned to benefit from the increased adoption of technology.
- Global X Artificial Intelligence ETF (ASX: GXAI) – seeks to invest in companies that potentially stand to benefit from the further development and utilisation of artificial intelligence (AI) technology in their products and services.
The post Consider this ASX ETF to cash in on the growth of Aussie technology appeared first on The Motley Fool Australia.
Motley Fool contributor Aaron Bell has positions in Xero. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has positions in and has recommended WiseTech Global and Xero. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has recommended Pro Medicus. The Motley Fool Australia has positions in and has recommended WiseTech Global and Xero. The Motley Fool Australia has recommended Pro Medicus. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.
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