The new S&P/ASX All Technology Index (XTX) closed its first day of operation today down 4%, echoing the broader market. The Index, envisioned as a 'mini NASDAQ' gives investors a chance to invest in one of the fastest-growing sectors on the ASX in a single trade.
What you need to know about the All Tech Index
The launch of the Index gives unprecedented recognition to ASX technology shares, which now number more than 200, up from around 100 just 5 years ago.
Recognising the critical mass of technology companies listed on the ASX, the Index provides an opportunity for investors to see how the sector is tracking. It will also provide a benchmark against which performance can be measured.
The new Index is designed to be a broader, more inclusive index than the existing S&P/ASX 200 Information Technology Index, reflecting the broad range of ASX-listed companies in the technology sector. The current Information Technology Index only covers ASX technology companies in the S&P/ASX 200 Index (INDEXASX: XJO).
The new Index is expected to be highly investable, with returns from investing in technology exceeding returns on the benchmark S&P/ASX 200 Index in recent years. Over the last 3 years, annualised returns from the ASX 200 have been around 10% – over the same period, returns from technology companies in the new index have been over 20%.
Which shares are included in the index?
This new S&P/ASX All Technology Index does not have a set number of stocks and will be rebalanced quarterly. To qualify for inclusion in the Index, ASX technology shares must have a market capitalisation of at least $120 million and have a minimum of $120,000 of shares traded each day.
The S&P/ASX All Technology Index will initially track 46 tech companies with a combined market capitalisation of some $100 billion. New Zealand-based Xero Limited (ASX: XRO) heads up the index, with the top five also including Computershare Limited (ASX: CPU), Afterpay Ltd (ASX: APT), REA Group Limited (ASX: REA) and Altium Limited (ASX: ALU). The remaining WAAAX shares WiseTech Global Ltd (ASX: WTC) and Appen Ltd (ASX: APX) are also represented.
The Index is expected to boost the number of tech initial public offerings (IPOs) this year, with tech shares representing the highest number of new listings on the ASX in 2019, according to the Australian Financial Review.
ASX General Manager of listing services Matt Cunningham told The Australian that the ASX is expecting at least six new sizable technology company listings before the end of June, including companies from the US, Singapore, New Zealand, and Israel.
