There is a great way for Aussies to get exposure to the Asian technology giants of Tencent and Alibaba. It’s an exchange traded fund (ETF) called Betashares Asia Technology Tigers ETF (ASX: ASIA).
What is Tencent and Alibaba?
Tencent are Alibaba are two of the biggest technology businesses in the world. They both have very diverse operations and assets.
Alibaba is actually more than 20 years old. The company is best known for its large retail businesses including Taobao, Tmall and Alibaba. It also has divisions focused on food delivery, logistics, videos, organisation collaboration software and cloud computing.
Tencent is also over 20 years old. It has investments and operations in things like online games, WeChat, QQ, video, news, music, online literature, mobile payments and cloud computing. But it’s not solely a Chinese-based business, it’s invested in businesses like Riot Games, Epic Games, Supercell and Miniclip.
Both of these businesses have been growing revenue and profit at a fast pace for many years and the share prices have largely been following that too.
But Tencent and Alibaba are not directly listed on the ASX. However, there is one way to Aussie investors to get a good amount of exposure to them in a single investment.
Betashares Asia Technology Tigers ETF
This is where the ETF comes in.
It gives Aussies exposure to 50 of the largest technology businesses outside of Japan.
Looking at the holdings of this ETF, Alibaba and Tencent make up 15.4% of the portfolio combined. This is a very sizeable position for just two businesses.
But there are also several other businesses which have a weighting of more than 5% of the ETF. They are: Taiwan Semiconductor Manufacturing (10.9%), Samsung Electronics (10.7%), Meituan (9.2%), JD.com (5.2%) and Pinduoduo (5.1%).
Whilst all of the businesses in Betashares Asia Technology Tigers ETF count as technology, BetaShares has split the portfolio into different sectors and shows the allocation: internet and direct marketing retail (28.2%), semiconductors (18.8%), interactive media and services (17.8%), technology hardware, storage and peripherals (13.9%), interactive home entertainment (8.2%), IT consulting and other services (5.3%), electronic manufacturing services (2.3%), movies and entertainment (1.1%), semiconductor equipment (0.9%) and other (3.5%).
It has a lot of diversification for just 50 different businesses.
It’s true that the majority of the ETF is actually invested in businesses in China – with a weighting of 55%. However, there’s another 21.4% listed in Taiwan, 18.1% in South Korea, 4.9% in India, 0.2% in Hong Kong and 0.4% in ‘other’.
The cost of this ETF is an annual fee of 0.67% per annum.
The returns of this ETF have been very strong. Over the last year, it has delivered a net return of 71.5%. Since inception in September 2018, the ETF has made returns of an average return per annum of 37.2%.
BetaShares shows the returns of the index that Betashares Asia Technology Tigers ETF tracks. Over the last five years the index has returned an average of 28.3% per annum.