Global X Morningstar Global Technology ETF
Invest in quality and undervalued global technology companies using Morningstar’s expertise.
Global X Morningstar Global Technology ETF (ASX:TECH) seeks to invest in companies positioned to benefit from the increased adoption of technology, including companies whose principal business is in offering computing Software-as-a-Service (SaaS), Platform-as-a-Service (PaaS), Infrastructure-as-a-Service (IaaS), and/or cloud and edge computing infrastructure and hardware.
TECH invests in global technology companies identified as possessing a strong competitive advantage relative to their peers, across areas like software, semiconductors, data processing, computer equipment and databases. TECH aims to track, before fees and expenses, the Morningstar® Developed Markets Technology Moat Focus IndexSM.
- Technology only represents 4% of the ASX¹ compared to 22% of the MSCI World Index².
- Morningstar define the Information Technology sector as those companies that generate their revenue primarily from hardware, software and semiconductors
1 https://www.marketindex.com.au/asx-sectors
2 https://www.msci.com/documents/10199/178e6643-6ae6-47b9-82be-e1fc565ededb
Morningstar identifies five sources of competitive advantage for companies:
- Intangible assets: Licenses, brand identity and intellectual property.
- Network effect: The value of the good or service increases with use.
- Switching costs: Obstacles to prevent customers from moving to another product or competitor.
- Cost advantage: Production at a lower cost to customers.
- Efficient scale: Where costs per unit of production are minimized assisting in overall profitability.
Using these helps to classify whether the company has a ‘wide’ moat (sustainable excess profit for 10 to 20 years), a ‘narrow’ moat (excess profit over 10 years) or no moat. Only companies with a wide or narrow moat are eligible for inclusion in the Morningstar® Developed Markets Technology Moat Focus Index SM.
1 Forbes, May 2018
TECH holds between 25 and 50 companies as included in the Morningstar® Developed Markets Technology Moat Focus Index .
Morningstar’s proprietary Moat methodology selects companies identified as having strong long-term competitive advantages relative to its peers.
Companies are also selected on the basis of how attractively they are priced relative to their fair value, as determined by Morningstar’s equity analysts.
Companies are equally weighted across two sub-portfolios of 25 companies. Each sub-portfolio is rebalanced each alternate quarter.
- As a core exposure to the global technology sector.
- As a tool for expressing long-term strategic or short-term tactical views on the technology sector.
- To offer diversification from the Australian market.
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The issuer of units in Global X Morningstar Global Technology ETF (TECH) ARSN: 616 755 652 is the responsible entity of the Fund, being Global X Management (AUS) Limited (AFSL 466778) (“Global X”). The product disclosure statement (PDS) for the Fund contains all of the details of the offer of units in the Fund. Copies of the PDS are available from Global X Management (AUS) Limited or at www.globalxetfs.com.au. In respect of each retail product, Global X has prepared a target market determination (TMD) which describes the type of customers who the relevant retail product is likely to be appropriate for. The TMD also specifies distribution conditions and restrictions that will help ensure the relevant product is likely to reach customers in the target market. Each TMD is available at www.globalxetfs.com.au. The information provided in this document is general in nature only and does not take into account your personal objectives, financial situations or needs. Before acting on any information in this document, you should consider the appropriateness of the information having regard to your objectives, financial situation or needs and consider seeking independent financial, legal, tax and other relevant advice having regard to your particular circumstances. Any investment decision should only be made after obtaining and considering the relevant PDS and TMD. Investments in any product issued by Global X are subject to investment risk, including possible delays in repayment and loss of income and principal invested. None of Global X, the group of companies which Mirae Asset Global Investments Co., Ltd is the parent, or their respective directors, employees or agents guarantees the performance of any products issued by Global X or the repayment of capital or any particular rate of return therefrom. The value or return of an investment will fluctuate and an investor may lose some or all of their investment. Past performance is not a reliable indicator of future performance.
Global X Management (AUS) Limited is the issuer of units in the Global X Morningstar Global Technology ETF. The Morningstar® Developed Markets Technology Moat Focus IndexSM was created and is maintained by Morningstar, Inc. Morningstar, Inc. does not sponsor, endorse, issue, sell, or promote the Global X Morningstar Global Technology ETF and bears no liability with respect to that ETF or any security. Morningstar® is a registered trademark of Morningstar, Inc. Morningstar® Developed Markets Technology Moat Focus IndexSM is a service mark of Morningstar, Inc.
Information current as at 18 August 2022.
About Global X ETFs
Global X ETFs is a leading global ETF provider with a growing range of cost-effective and innovation-led products which are built to help investors and their advisers achieve better investment outcomes. While we are distinguished for our Thematic Growth, Income, and International Access ETFs, we also offer Core, Commodity, and Digital Assets funds to suit a wide range of investment objectives. Explore our ETFs, research, and insights, and more at www.globalxetfs.com.au.
Global X is a member of Mirae Asset Financial Group, a global leader in financial services, with more than US$528 billion in assets under management worldwide.¹ Mirae Asset has an extensive global ETF platform ranging across the US, Australia, Brazil, Canada, Colombia, Europe, Hong Kong, India, Japan, Korea, and Vietnam with almost $100 billion in assets under management.²
¹ Assets under management as at March 2023, Mirae Asset Global Investments
² Assets under management as at June 2023, Mirae Asset Global Investments
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TECH invests in the technology sector as defined by the Morningstar Global Category Classification, which includes companies that generate their revenue from hardware, software and IT services.
Investors should note that some high-profile companies, like Amazon and Facebook, that have a heavy technology association to their products or services belong to other sectors because their revenue does not come directly from the sale or licensing of their technology. They are therefore not included in TECH.
The index is comprised of two sub-portfolios, each consisting of 25 stocks. One of the sub-portfolios is alternately rebalanced each quarter and the stocks are equally weighted. The total number of stocks in the index depends on the degree of similarity between the two portfolios; a minimum of 25 stocks if the portfolios are identical and a maximum of 50 stocks if no companies are in both portfolios. This approach is taken to reduce company-specific risk and at the same time avoid excessive portfolio turnover.
The choice of an equal weighting scheme seeks to provide investors exposure to the overall sector and allow all stocks to contribute equally to returns. Large-cap stocks do not dominate as they do where holdings are weighted by market capitalisation.
The maximum weight of an individual country in the index is capped at 10% plus its corresponding weight in the benchmark, or 40%, whichever is higher. Maximum Country Weight = Max (40%, benchmark weight + 10%).
An economic moat, like a physical moat, represents the degree to which a company has built a competitive advantage around its business. This can be in terms of intangible assets, costs of switching to alternative providers, network effects, input cost advantages or efficiencies of scale. The extent to which a company holds some, or all of these, helps define how robust that company is viewed to be relative to its competitors and whether it is assigned a wide, narrow or no Morningstar Economic Moat Rating. The index is comprised exclusively of companies identified as having wide or narrow moats.
TECH can be used as a core exposure to the global technology sector and can aid portfolio sector diversification via investment in a sector that is underrepresented in the Australian market.
TECH may also be used as a tool for expressing long-term strategic or short-term tactical views on the technology sector.
For those using a core-satellite investment approach, TECH can be used in either core or satellite. It is differentiated from market capitalisation weighted strategies by its research-focused, value-oriented approach to stock selection.
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The issuer of this product is identified at the top of this page. The PDS and target market determination for the product are available in the Documents section of this listing. Prospective investors should consider the PDS before deciding to acquire the product. This product listing was vetted by and approved by the product issuer identified above before publishing. Investment Markets (Aust) Pty Ltd AFSL 527875 (IM) is not the issuer of the product.
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