The S&P/ASX All Technology Index (ASX: XTX) launched at the end of February this year, right before the March market meltdown. The meltdown battered the All Technology Index, causing it to fall from above 2,000 to below 1,200. Since then, however, the index has staged a roaring recovery, climbing to nearly 2,200. The index sits at 2,075.20 at the time of writing.
Market meltdown takes toll
Many of the major constituents on the Index were battered in the market meltdown. Afterpay Ltd (ASX: APT) fell nearly 80% from its peak, while WiseTech Global Ltd (ASX: WTC) fell more than 60%. Shares in Webjet Limited (ASX: WEB) fell 76%, EML Payments Ltd (ASX: EML) shares dropped 75%, and Domain Holdings Australia Ltd (ASX: DHG) shares fell 54%.
But since the March low point, the index has seen a V-shaped recovery led by strong surges in the share price of constituent companies. At the time of writing, Afterpay is now up more than 400% from its low, while the WiseTech Global share price has gained more than 100%. Webjet shares are up 100% from their low, EML Payments shares are up 208%, and Domain Holdings shares are up 95%.
Following the recovery, the companies in the All Tech Index boast a combined market capitalisation of more than $100 billion. There’s no doubt the index had a rocky start, but it serves an important purpose. In the 5 years prior to its launch, the number of tech shares listed on the ASX doubled from 100 to over 200. The All Technology Index is designed to be a broader, more inclusive index than the previously existing S&P/ASX 200 Information Technology Index (ASX: XIJ), which only covers tech companies in the ASX 200.
Despite its rollercoaster start, the All Technology index is seen as highly investable, with returns from investing in technology exceeding returns on the benchmark S&P/ASX 200 Index (ASX: XJO) in recent years. Over the 3 years prior to the launch of the All Technology Index, the ASX 200’s annualised total return was around 10%. Over the same period the technology companies that would have been in the All Technology Index (had it existed) would have returned over 20%.
Since the market low in March, ASX 200 has gained 32% (at the time of writing). The All Tech Index, on the other hand, has surged more than 75%, showing the strength of its constituent stocks. There is no doubt ASX technology shares are increasingly popular with investors. The All Technology Index will continue to provide an accessible option to invest in the sector and gauge its progress.
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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 AFTERPAY T FPO, Emerchants Limited, and WiseTech Global. The Motley Fool Australia owns shares of and has recommended Webjet Ltd. The Motley Fool Australia has recommended Emerchants 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.
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