The new ASX All Technology Index is set to commence operation today after launching on Friday. The index, with the code XTX, will have a combined market capitalisation of more than $100 billion and include many of Australia’s best known tech companies.
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 (INDEXASX: XJO).
Based on Friday’s market capitalisations, the index is expected to be topped by accounting software provider Xero Limited (ASX: XRO). Computershare Limited (ASX: CPU) is next in line with the top 5 rounded out by Afterpay Ltd (ASX: APT), REA Group Limited (ASX: REA), and Altium Limited (ASX: ALU).
As reported in ITnews, Federal Minister for Science and Technology Karen Andrews said the index would “play a big role in increasing the tech sector’s visibility and will make it easier for everyday Australians to invest in tech companies, and share in their success.”
The first ETF to track the index is set to launch shortly thanks to Betashares, and will trade under the ticker ATEC. This is expected to be an attractive proposition for investors. As the executive general manager of listings, issuer services and investment for the ASX Matt Cunningham told ITnews, “over the last three years the S&P ASX 200 annualised total return has been around 10% – while over the same period the technology companies who would have been in this index if it had existed, would have returned over 20%.”
The All Technology index is likely to boost the number of tech IPOs this year, following a fall in the number and value of IPOs in 2019. Tech stocks represented the highest number of new listings on the ASX in 2019, according to the Australian Financial Review. Notable tech IPOs in 2019 included Tyro Payments Ltd (ASX: TYR), Moneyme Ltd (ASX: MME), Openpay Group Ltd (ASX: OPY) and Limeade Inc (ASX: LME)
Cunningham told The Australian that the ASX is expecting at least 6 new sizeable technology company listings before the end of June, including companies from the US, Singapore, New Zealand, and Israel.
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Kate O'Brien has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Link Administration Holdings Ltd. The Motley Fool Australia owns shares of AFTERPAY T FPO, Altium, Appen Ltd, WiseTech Global, and Xero. The Motley Fool Australia has recommended carsales.com Limited, Link Administration Holdings Ltd, and REA Group Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.