How did the S&P/ASX All Technologies Index (XTX) perform in FY21?

The last financial year proved to be a quite a ride for the ASX’s newest index…

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The 2021 financial year is starting to feel like a while away now, even though it only ended about a fortnight ago. Here at the Fool, we’ve been looking back at some of the best and worst ASX share performers from FY21, as well as how certain indexes performed over the financial year that was.

Today, we’re continuing this trend with a look at the ASX’s newest index, the S&P/ASX All Technology Index (ASX: XTX).

The All Tech Index only started life back in February 2020. This means it has just completed its first full financial year on the ASX boards. As such, it’s a great time to check out how it has performed for investors.

How did the All Tech Index perform in FY21?

So, the All Tech Index started the financial year at roughly 2,128 points. It ended up at 2,963 points as of 30 June 2021. This means the index gained an impressive 39.24% in FY21. Not a bad way to mark your first financial year.

When we compare that performance to the S&P/ASX 200 Index (ASX: XJO) and the All Ordinaries Index (ASX: XAO), it gets even better. The ASX 200 managed to deliver a rise of 24% over FY21, which was just pipped by the All Ords, with its gain of 26.5%.

Both very respectable numbers, but also close to half of what the All Tech Index managed to deliver. What’s more, all 10 of the top holdings of this index managed a positive return for the year, in stark contrast to some of the other sectors we’ve looked at already.

What does the XTX Index look like?

The All Tech Index has far more than 10 companies within it, 79 at the moment to be precise. But, as the weightings in the table below demonstrate, this index is very ‘top heavy’, with the top 10 shares accounting for almost 70% of the entire index’s weighting. In other words, the shares below did most of the heavy lifting.

So case closed? Don’t bet on it. Let’s now take a look at how the individual holdings of the All Tech Index performed over FY21. Here are the top ten holdings of the index, along with their weightings, according to exchange-traded fund (ETF) provider BetaShares:

ASX XTX Share XTX weighting (as of 13 July 2021) FY2021 share price performance Market capitalisation (as of 13 July 2021)
Afterpay Ltd (ASX: APT) 20.1% 92.2% $34.8 billion
Xero Limited (ASX: XRO) 11.9% 65% $20.44 billion
Seek Ltd (ASX: SEK) 8.2% 51.4% $11.49 billion
Computershare Limited (ASX: CPU) 6.5% 28.8% $9.75 billion
REA Group Ltd (ASX: REA) 5.9% 56.7% $21.88 billion Ltd (ASX: CAR) 4.2% 13.2% $5.99 billion
Nextdc Ltd (ASX: NXT) 3.8% 20% $5.43 billion
WiseTech Global Ltd (ASX: WTC) 3.4% 65% $9.88 billion
Altium Limited (ASX: ALU) 3.3% 13.8% $4.95 billion
Pro Medicus Limited (ASX: PME) 2% 125.7% $6.17 billion

Some ASX tech share winners and… winners

So as you can see, Afterpay remains the king of the All Tech pile, with a massive weighting of 20.1%. Afterpay was also one of the best performers in the entire All Tech Index, managing a very impressive 92.2% over the year.

It was only bested in this top-10 list by healthcare company Pro Medicus. Pro Medicus, while being one of the index’s smaller holdings, managed the best return of the lot, with a pleasing 125.7% for the year.

But even the All Tech Index’s lowest top-10 stock in still managed to add 13.2% for the year to 30 June. That’s nothing to turn one’s nose up at.

So what went so right for ASX tech shares in FY21? Well, the first thing to note is that FY21 started in July 2020, a time when most ASX shares were still in recovery mode from the March 2020 share market crash.

ASX tech shares were hit especially hard in this crash, with the All Tech Index losing around 30% of its value between 28 February (the day it listed, incidentally) and 30 March 2020.

COVID, earnings, SaaS and more

But it’s been onwards and upwards from there. Many of these ASX tech shares were categorized by investors as ‘pandemic winners’ due to their digital product lines and connections to COVID-safe practices such as contactless payments and e-commerce.

But many have also put up some very impressive growth figures in the months (and year) since, which have also boosted their appeal to investors. For example, Xero managed to post revenue growth of 18%, subscriber growth of 20% and a bump in earnings before interest, tax, depreciation and amortisation (EBITDA) of 39% for the 12 months to 31 March 2021.

WiseTech Global is another share to look at in this light. WiseTech was able to tell investors revenues were up 16% and EBITDA by 43% in its February half-year earnings report.

We also had other events that got investors very interested in tech over FY2021. Afterpay was one of these. The company really turned heads when it announced in May last year the Chinese e-commerce giant Tencent Holdings had acquired a 5% stake in the company.

This helped investors look through the gloom in the months following the March share market crash. These kinds of sentiments could well have spilled into FY21 for Afterapy and other ASX tech shares in this index.

Many of the shares in the All Tech Index have traits in common. Capital light business models, often built on Software-as-a-Service (SaaS) platforms. Future-facing technology. Innovative and disruptive products.

All of these characteristics may have helped these companies shake off the market crash, and thrive in a post-COVID world. And investors who stuck to their guns during the volatility of FY21 have certainly been rewarded for their patience.

Who knows what FY22 will bring for this space. But we do know it will certainly be worth watching.

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Motley Fool contributor 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 has recommended AFTERPAY T FPO, Altium, Pro Medicus Ltd., WiseTech Global, and Xero. The Motley Fool Australia owns shares of and has recommended AFTERPAY T FPO, Altium, Pro Medicus Ltd., WiseTech Global, and Xero. The Motley Fool Australia has recommended REA Group Limited, SEEK Limited, and Limited. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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