ASX All Technology Index swells with new additions

The S&P/ASX All Technology Index (XTX) is about to swell with 8 new ASX tech shares. Are ASX tech shares still a buy after a stellar 6 months?

small lights in the form of waves representing swell of asx tech shares

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The ASX's newest index, the S&P/ASX All Technology Index (INDEXASX: XTX) is capping off an inaugural 6 months for the ages. Since it first listed back in February, the value of this index has climbed from approximately 1,800 points on listing to 2,340 today. Mind you, that period includes the majority of the March share market crash that hit the ASX earlier in the year.

Designed to give a more direct exposure to the tech shares on the ASX over the previously-used S&P/ASX 200 Information Technology Index (INDEXASX: XIJ), the All Technology Index has been buoyed by the massive outperformance of its top shares like Afterpay Ltd (ASX: APT) and Xero Limited (ASX: XRO) over the past few months.

But according to reporting in today's Australian Financial Review (AFR), this index is about to get another boost. Today heralds this index's quarterly rebalancing (a process that all indices undergo periodically). And according to the AFR, the XTX is about to get 8 new members. This process will swell the index to a total market capitalisation of more than $143 billion, up from $110 billion at the last rebalancing.

None of the index's current top 10 holdings are set to change. These include Afterpay as well as Xero, Seek Limited (ASX: SEK), Computershare Limited (ASX: CPU) and REA Group Limited (ASX: REA).

Joining the index will be Dicker Data Ltd (ASX: DDR), Brainchip Holdings Ltd (ASX: BRN), Envirosuit Ltd (ASX: EVS), Mach7 Technologies Ltd (ASX: M7T), Novonix Ltd (ASX: NVX), Splitit Ltd (ASX: SPT), Sezzle Inc (ASX: SZL) and Whispir Ltd (ASX: WSP).

Is ASX tech a buy today?

Since the XTX is an index, you can't buy shares in it directly. But luckily, you can buy shares in an exchange-traded fund (ETF) that tracks this index. The BetaShares S&P/ASX Australian Technology ETF (ASX: ATEC) does just that, holding all 50 companies (soon to be 58). Thus, if you are interested in getting a slice of the action from the ASX tech space, this ETF is a great place to start.

I do think the 'tech sector' has run a bit in recent months, especially since ATEC units have appreciated 27.7% since first listing back in March. But I'm also bullish on the Aussie tech sector in general, and so I think this ETF would make a great long-term investment, especially for a passive investor. As the index rebalances, it prunes out the losers and adds to the winners, which I think is a great advantage for the tech space in particular. ATEC does charge a management fee of 0.48% per annum, something to keep in mind.

Sebastian Bowen has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends MACH7 FPO and Whispir Ltd. The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of Xero. The Motley Fool Australia's parent company Motley Fool Holdings Inc. recommends Sezzle Inc. The Motley Fool Australia owns shares of and has recommended Dicker Data Limited. The Motley Fool Australia owns shares of AFTERPAY T FPO. The Motley Fool Australia has recommended MACH7 FPO, REA Group Limited, SEEK Limited, Sezzle Inc, and Whispir Ltd. 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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